How Hillary Clinton’s Credit for Out-of-Pocket Health Costs Could Backfire on Taxpayers

Hillary Clinton said recently that she supports efforts to allow some under 65 to buy into Medicare and suggested that this would help lower health-care costs. A key element of her broader health-care platform could, however, increase them–at a sizable cost to the federal government.

A plan the Clinton campaign unveiled in September would create a refundable tax credit worth as much as $2,500 per individual and $5,000 per family to cover out-of-pocket health-care expenses. The campaign has said that the credit would be “available to insured Americans with qualifying out-of-pocket health expenses in excess of five percent of their income, and who are not eligible for Medicare or claiming existing deductions for medical costs.” This means people eligible for the credit would include not only those who have plans through the Obamacare exchanges but also those insured through their employer. Making the credit refundable could allow individuals with little or no income tax liability to receive a refund from the federal government toward their out-of-pocket health costs.

The potential breadth of this proposal could prove its undoing. For one thing, the most recent Census Bureau survey, published in September, estimates that 175 million Americans are covered by employer plans. That’s nearly 14 times the 12.7 million individuals covered by plans through the Affordable Care Act exchanges. While there have been proposals to increase federal subsidies provides to those enrolled through the ACA exchanges, this is the only plan suggesting new federal subsidies for those with employer coverage.

Extending federal subsidies for out-of-pocket costs incurred by those with employer-provided plans could dramatically remake that market. Companies could opt to increase employee cost-sharing, knowing that workers would recoup some or possibly all of their new costs through the federal program. A Kaiser Family Foundation survey of employer plans last year found that only 19% of workers with single coverage faced a deductible of more than $2,000. The Clinton plan sets the maximum credit for individuals at $2,500. If the federal government provides individuals with high health costs a refundable credit to help subsidize their expenses, employers would have reason to try to offload their costs onto employees—which ultimately could end up costing the U.S. Treasury more.

Details of the Clinton plan are still limited. Should it be implemented, policy makers could attempt to shape or amend the tax credit’s effects. Still, it’s possible that a policy designed to absorb higher health costs would shift them from employers and workers to federal taxpayers. That cost-shifting wouldn’t lower spending–and could increase it. Knowing there is a federal credit might give employees incentive to incur additional expenses to exceed the subsidy threshold. That would mean a credit aimed at mitigating the effects of rising health costs for some families could end up exacerbating the problem on a broader scale.

This post was originally published at the Wall Street Journal Think Tank blog.

Obamacare Harming Ventures to Control Health Costs

Amidst the ongoing debate about whether Medicare can contain costs, it’s worth looking at a relevant article in the issue of Health Affairs released yesterday.  The article (subscription required) traced one Medicare Advantage plan, a chronic condition special needs plan for patients with diabetes operating in several states in the South.  The plan in question engages in home house calls, nurse management, care transitions, and other similar interventions to improve the quality of care beneficiaries receive.  The study examined diabetic patients in the plan on several metrics of care, and compared their health outcomes to a cohort of diabetic beneficiaries who remained in government-run Medicare.  The results?  Enrollees in the Medicare Advantage plan “had lower admission rates, shorter average lengths-of-stay in the hospital, lower readmission rates, slightly lower rates of hospital outpatient visits, and slightly higher rates of physician office visits than their fee-for-service counterparts.”  In other words, beneficiaries in the private Medicare Advantage plan got better care than beneficiaries in government-run Medicare.  And government-run Medicare’s outcome gap between white and non-white patients was virtually eliminated under the Medicare Advantage plan.

In one instance at least, it appears that beneficiaries in Medicare Advantage plans are getting better care than in government-run Medicare.  So what does Obamacare do to these innovative plans?  It cripples them.  According to one study, Obamacare’s Medicare Advantage cuts by 2017 will cut enrollment in half, and cut plan choices by two-thirds.  Not only will fewer beneficiaries enroll in these plans and therefore receive these types of benefits – fewer plans will even come into existence, meaning there will be fewer innovative practices created like the ones profiled in the Health Affairs piece.

In recent weeks, liberals have taken to making the point that Medicare has a great record of reducing costs.  And in one sense, it does – it can do a great job of dictating prices to providers, at least in the short term.  But all those arbitrary reductions in provider rates merely cause the air in the proverbial balloon to move when squeezed, as private insurers pay more because government insurers pay less.  The real savings comes in reducing costs by improving care – and on that note, the Health Affairs article shows but one way the private sector is outperforming the federal government.

Thus, even as the federal government, in various Obamacare provisions, is trying to create new care integration models in order to replicate what the private sector has already achieved, it’s simultaneously undermining those private sector innovations by cutting payments to Medicare Advantage plans.  This perverse behavior is one more reason why Obamacare will not live up to its promise of containing health care costs.

The Myth of “Market Power”

The Center for Budget and Policy Priorities released a preliminary analysis of the Ryan-Wyden Medicare proposal late last week, and (unsurprisingly) outlined reasons to oppose it.  But included in their brief was an interesting line: “Ryan-Wyden would deny Medicare much of its ability to serve as a leader in controlling costs by depriving it of the considerable market power it secures from its large enrollment.”  The “market power” argument is one liberals toss around frequently, claiming Medicare can use its power to get “better bargains.”

But there’s one easy question that exposes the fallacy of this liberal argument.  If anyone tries to talk about preserving or expanding Medicare’s “market power,” ask them this: Would you have any objections if drug companies, or major hospitals, decided to drop out of the Medicare program, or all government-run programs?  Recent experience suggests that Democrats will NOT allow providers to drop out of government-run programs – in Massachusetts, Gov. Deval Patrick proposed “solving” the problem of physician access by forcing doctors to participate in government-organized insurance plans as a condition of licensure.  That’s NOT a market – that’s government coercion.  And “leveraging market power” is just a euphemism by the left for the government dictating prices to medical providers.

Liberals’ incoherence on “market power” is actually quite stunning:

  • Zeke Emanuel wrote a New York Times opinion piece yesterday on premium support (about which more soon) stating that when it comes to Medicare, “We Must Cut Costs, Not Shift Them.”  The only problem with his logic is that one 2008 study found that Medicare and other government-run programs ALREADY shift costs from the public sector to the private sector – to the tune of nearly $1,800 per family per year.
  • Ezra Klein last week alleged that Medicare Advantage compete against government-run Medicare, apparently unaware that the structure of the Medicare Advantage program means plans actually compete against themselves, and have ZERO incentive to compete against government-run Medicare on price.
  • Then there’s Paul Krugman, who says that “Patients Are Not Consumers.”  Well, if patients are not consumers, then how can there be a “market” for Medicare to exercise its “power” over?  The only other potential “buyers” under Krugman’s logic are government bureaucrats – and does anyone think some government officials sitting in Washington offices constitute a “market” in any realistic sense of the word?

The fact of the matter is, many conservatives believe that there is certainly NOT a market in health care – or not enough of one anyway – and that comprehensive entitlement reform should look to change that fact.  And their rhetoric notwithstanding, the policy positions of most liberals prove that their talk about increasing “market power” is really just an excuse for government to increase its dominance over everything in its path.

Ohio Study Confirms: Obamacare Will Raise Premiums, Kill Current Coverage

Last month, Wisconsin released a study showing how Obamacare will raise premiums and lead firms to drop coverage.  Yesterday, the state of Ohio released a report from independent actuaries at Milliman that came to much the same conclusions – nearly 700,000 individuals leaving employer-sponsored coverage in Ohio alone, along with premium increases for individual policies averaging 55-85%.  The report is over 150 pages long, but the key section is from pages 26-45, which highlights the major changes in both premiums and coverage scheduled to take place thanks to Obamacare:

Dropped Coverage

  • A total of 688,000 Ohio residents will move OUT of employer coverage; “population decreases in the [employer insurance] markets will be driven by low-income individuals opting out of these plans for Medicaid.”
  • While 503,000 previously uninsured residents will obtain Medicaid coverage, a greater number of individuals (569,000) who already have coverage will move into government-run Medicaid – suggesting Obamacare encourages both employers and employees to quit private coverage in order to join taxpayer-funded programs.  As the report notes, “The other half of new Medicaid enrollees will consist of individuals who currently have ESI [employer-sponsored insurance] or individual coverage.”
  • Likewise, while 289,000 previously uninsured residents will obtain new coverage in Exchanges, almost as many (204,000) will join Exchanges after having employer coverage – likely because Obamacare will encourage firms to “dump” their workers.
  • “The estimated prevalence of grandfathered plans is expected to diminish quickly and be almost non-existent by 2014” – meaning virtually everyone will lose their current plan within three short years of Obamacare’s passage.

Higher Premiums

  • Before subsidies, “the individual health insurance premiums are estimated to increase by 55% to 85% above current market average rates (excluding the impact of medical inflation).”  The report goes on to delineate the specific reasons for these skyrocketing premiums.
  • “Individual health insurance market premium rates are estimated to increase between 20% and 30% on average due to benefit expansion requirements” – i.e., Washington bureaucrats forcing individuals to buy more health coverage than they may want or need.
  • Premium rates on the individual market will increase between 35% and 40% because high-risk pools will close and the individuals purchasing insurance through Exchanges will be sicker than the population as a whole.  This conclusion is noteworthy because it contradicts the Congressional Budget Office, which predicted that individuals in Exchanges would be healthier than average.
  • Premiums will also increase by 2-3% due to the various taxes – on device manufacturers, drug companies, and insurers – included in Obamacare; “as with any tax on businesses, these fees will be passed along to the consumer to the extent possible.”
  • Requirements under [Obamacare] to cover preventive services at 0% cost-sharing have already caused premiums to increase.”
  • For small businesses, premiums could rise 150% for some firms with healthy populations – but the firms with the highest-risk (i.e., least healthy) populations would see their premiums fall by only 38%.
  • The cumulative effect of these rating changes may result in a majority of [small businesses] experiencing premium rate increases or decreases beyond the average estimated market change of 5% to 15%.  In many cases these changes could be greater than 25%, ignoring changes in medical inflation. Premium rate volatility may affect the stability of the ESI-small group market by creating greater financial incentives for employers to self-fund or terminate their plan.  Employers wanting to continue their plan may address the issue of substantial premium rate increases by changing plan designs to shift more cost to employees, as current benefit plans may become unaffordable.”

The report also includes a separate study indicating that the Exchanges will likely cost at least $20 million dollars per year to maintain (exclusive of implementation costs) just in Ohio alone.  These administrative costs could raise premiums by more than 1% – over $50 per year – for individuals enrolling in Exchange plans.

Candidate Obama repeatedly promised to cut insurance premiums by an average of $2,500 per family, and also promised that “for those of you who have insurance now, nothing will change under the Obama plan – except that you will pay less.”  Today’s report once again illustrates how Democrats’ 2700-page health care law fails on both counts.

Three Hits on State Budgets

As the Administration keeps putting out talking points about states’ supposed flexibility to manage their Medicaid programs, it’s worth examining some of the issues and implications surrounding this issue:

  1. CBPP Report a One-Sided Argument:  To bolster the Administration’s case, the Center for Budget and Policy Priorities released a paper yesterday arguing that eliminating Medicaid maintenance of effort (MOE) requirements included in the health law would cause individuals to lose coverage, and “would also slow economic growth and job creation.”  However, the paper contains numerous flaws in its logic:
    • The study talks about beneficiaries losing Medicaid coverage outright if the maintenance of effort provisions are weakened or eliminated.  But granting states additional flexibility (by loosening the MOE mandates) would also allow them to take actions that would PREVENT beneficiaries from losing coverage – for instance, modest cost-sharing increases (see item #2 below) or enrollment checks to make sure only eligible beneficiaries are receiving taxpayer-funded assistance.  A modest co-payment increase is NOT equivalent to losing all Medicaid coverage – but the CBPP study conflates the two.
    • While the paper argues that “deep cuts in Medicaid eligibility would likely be used, at least in part, to free up room for bigger tax cuts,” it does not mention the tax INCREASES that states are being forced to consider to close their fiscal deficits, because Washington will not grant them permission to change their Medicaid programs.  Does anyone believe that Illinois’ recently passed 66 percent tax increase will help that state’s economic growth?
    • Similarly, the CBPP paper does not address the cuts in other areas of government that states may have to contemplate if not given the ability to reform their Medicaid programs.  Most of these cuts would come in the areas of law enforcement and education, where states traditionally spend most of their budgets.  It is highly presumptuous of Washington bureaucrats to believe that Medicaid alone should be a higher priority for state budgets than other important programs like education – to say nothing of the fact that cuts to education spending could have a larger negative economic impact than adjusting Medicaid spending.
  1. Flexibility HOW?  The Hill reported yesterday on a speech by Gov. Gary Herbert (R-UT) at the Heritage Foundation.  In his speech, the Governor indicated Utah would be seeking a waiver from the federal government not to cut beneficiaries from the Medicaid rolls (as the CBPP report argues), but instead “to charge richer Medicaid beneficiaries higher co-pays” – which ordinarily cannot exceed $3 for a doctor’s visit.  In addition, “Utah wants the Centers for Medicare and Medicaid Services to approve a request made eight months ago allowing the state to communicate with Medicaid beneficiaries via e-mail.”  The speech may prompt some to ask:  If a state cannot charge a $5 co-pay for a doctor’s visit – and cannot use electronic messaging to communicate with its beneficiaries more efficiently – without obtaining Washington’s permission, how exactly is the Medicaid program flexible?  And if CMS officials need to take more than eight months to approve a state’s request to contact its beneficiaries via e-mail, is Washington really being as flexible to states’ needs as Secretary Sebelius claims?
  2. Churning Beneficiaries Will Burn States’ Administrative Costs:  Last week the journal Health Affairs published an interesting article (subscription required) about low-income Americans’ eligibility for Medicaid or Exchange insurance subsidies.  The study found that within three years, nearly three-quarters of low-income adults with incomes initially under 200 percent of poverty would have an income change impacting their insurance coverage – and more than three in ten (29.3%) would have at least FOUR changes in insurance eligibility during that three-year time span.  (Remember: Individuals with incomes under 133% of poverty are eligible for Medicaid; those above that threshold will receive subsidies to purchase coverage on state Exchanges.)  This constant “churning” back and forth between Medicaid and Exchange coverage could prove taxing to beneficiaries – however, it will likely also strain states’ budgets, as state Medicaid programs and Exchanges will have to administer (and re-administer) eligibility determinations.  There is also the fiscal “tug-of-war” this churning could create – the federal government may look to keep as many beneficiaries on Medicaid for as long as possible, because Medicaid coverage will be cheaper than Exchange plans (due to low provider reimbursement), and because states are forced under the health law to fund a portion of the Medicaid expansion (unlike the Exchange subsidies).  Unfortunately, if the federal government proves as uncooperative in implementing the Medicaid expansion in 2014 as it has been with states during their current fiscal crisis, state governments may be left holding the bag for much more Medicaid spending than even they anticipate thanks to the unpopular 2,700 page health care law.

Health Law Accelerates a Medicaid Meltdown

Over the weekend, both the New York Times and Kaiser Health News ran stories about the dire warnings being issued from several states regarding their Medicaid programs.  Facing massive budget shortfalls, governors as politically diverse as Florida’s Rick Scott and New York’s Andrew Cuomo are looking to achieve significant savings from their Medicaid programs.

However, the restrictions written into the health care law and the “stimulus” bill (which gave states temporary Medicaid relief) prevent states from reducing their eligibility requirements (i.e., cutting the budgetary coat to meet a state’s fiscal cloth) until the law takes full effect in January 2014.  Arizona’s Governor has already requested a waiver from the requirements, but it’s unclear whether the federal government will approve such a request, from Arizona or any other state.  If the Administration does not, some states may then face other, even more difficult, budgetary choices.  The National Governors Association and Republican Governors Association have both written to the Administration objecting to these “maintenance of effort” requirements, which the RGA said would have “unconscionable” effects.

Kaiser Health News quotes two other possible “solutions” to the Medicaid dilemma, neither of which would have much appeal to most Republicans.  Referring to the Medicaid program, HELP Committee Chairman Harkin suggested that “maybe the federal government should take over the whole thing.” (Remember, these are the folks arguing that the health care law is NOT a government takeover of health care.)  Besides just shifting costs from the states to the federal government, such a one-size-fits-all program would stifle states’ flexibility (not to mention sovereignty) in a way that allows them to generate innovative solutions on health care – including solutions that are more market-based.

The other option floated by several Democrats – including Finance Committee Chairman Baucus, HELP Committee Chairman Harkin, and former Speaker Pelosi – would extend federal Medicaid aid first included in the “stimulus” until 2014.  That however raises two important problems of its own.  First, such a move would cost hundreds of billions of dollars – likely wiping out the purported deficit “savings” from the health care law.  Second, if states’ Medicaid programs are in such a poor state that they require a federal bailout for over five years (the “stimulus” aid was made retroactive to late 2008, and Democrats want to extend it until 2014), why on earth should the federal government be forcing MORE individuals on states’ strapped Medicaid rolls in the years after 2014?

In a story this morning about a new Medicaid advisory commission, Politico quotes commission member Sara Rosenbaum as saying that the advisory body should “not add…one cent to the burden of the states.”  It’s unfortunate that Democrats didn’t take the same tack before imposing the new and onerous unfunded mandates on state Medicaid programs included in the health care law.

If You Like Your Current Plan, Watch Out…

The New York Times has an article this morning reporting that the interim final rules for grandfathered health plans will be released today.  The article notes that “in some respects, the rules appear to fall short of the sweeping commitments President Obama made while trying to reassure the public in the fight over health legislation.”  The Administration, in attempting to sell the rules, now claims that allowing people to keep their current coverage “was just one goal of the legislation,” and acknowledged “that some people, especially those who work at smaller businesses, might face significant changes in the terms of their coverage.”  The White House is now attempting to “spin” this broken promise by saying that plans losing grandfathered status will gain additional “protections” thanks to the myriad new mandates in the law – in other words, “You may like your current plan, but government knows better than you what you’ll really like.”

(A word of caution about the details in the Robert Pear piece: While he cites statistics regarding the rule’s impact – for instance, 51 percent of employees would be in plans losing grandfathered status by 2013 – it’s unclear whether these data come from the draft regulation leaked last week or the official document.  While the OMB website shows that the grandfathered reg finished its clearance at the agency last Friday, the interim final regulation has yet to be posted at

On a related note, the Associated Press has a story this morning about a new PricewaterhouseCoopers study (registration required) predicting medical inflation trends for next year.  The report predicts a 9% rise in medical cost inflation, and notes as one of the prime drivers of rising costs for private insurance coverage the growth in cost-shifting from public to private payers as a result of Medicare payment cuts to hospitals included in the health care law.  As the study notes, “The patient population that is expected to increase the most [under the law] – Medicaid – pays the least.”  The report also highlights the rising costs associated with some of the federal mandates being imposed both now and in 2014, and opines that “prices may also be increased in anticipation of higher demand in 2014 and beyond when more people have insurance coverage.”

To summarize: Candidate Obama promised BOTH that individuals who like their current plan can keep it AND that his reforms would reduce premiums by $2,500 per family per year.  The Administration is on the cusp of releasing regulations that by their own admission would break the first promise – and, by imposing costly new federal mandates on insurance coverage, violate the second as well.  Coupled with the cost-shifting and other inflationary pressures already growing on employers, as outlined in the PWC report, these regulations will only RAISE costs for employers, thereby encouraging them to stop offering coverage entirely.  Any way you slice it, this is NOT “reform.”

Who Are You Gonna Believe — Me, Or Your Lying Eyes…?

That’s the impression one might get reading the latest “report” released by the Center for American Progress and the Commonwealth Fund about how health “reform” will supposedly reduce health costs.  The groups released this paper in response to reports by the Congressional Budget Office that the law will raise individual market premiums by an average $2,100 per family and from the Centers for Medicare and Medicaid Services that the law will raise health costs by $311 billion in its first ten years.  Even a cursory analysis of the paper reveals how it comes up short, reflecting a study that may have been drafted in the Land of Make-Believe:

  • One of the study’s authors, David Cutler, was the same Obama campaign adviser who co-wrote the famous memo attempting to defend candidate Obama’s assertion that his health plan would save families $2,500 per year on premium costs.  Cutler’s memo promised savings of $200 billion per year, or $2 trillion over ten years; today’s report asserts only $590 billion in savings over the next decade.  So anyone trying to justify this new $590 billion “savings” number should first explain why the estimated savings from health care reform declined by more than 70 percent in two short years.
  • The report attempts to differentiate itself from the analyses made by non-partisan experts at both CBO and CMS, saying these reports are “limited” and “incomplete” because neither report assigns budgetary savings to various health care delivery system reforms in the law.  In other words, since CBO and CMS didn’t give the groups favorable assumptions about the law’s broader effects, those conclusions should be discarded and replaced with their assumptions instead. (In legal terms, I believe this is called “venue shopping.”)
  • Even the authors admit “there is not much evidence in the published literature on policy reforms short of severe constraints [i.e. government-imposed rationing] that save large amounts of money” – but to solve this “problem,” the authors instead choose to rely on “a less formal, but no less important, literature that sees the world differently.” (I’m not making that part up – they really do admit that it’s “less formal.”)
  • The savings assumption “assumes that a reduction in Medicare and Medicaid payments” under the health law “will not be offset by higher prices to private payers.”  That is of course a highly favorable assumption, and not a likely one either, considering that private payers currently pay an average of nearly $1,800 per year in higher costs due to under-payment by government programs.
  • The report’s higher deficit assumptions stem from an assumption that “90 percent of private health insurance savings are passed on to employees through increased wages, which are taxed.”  So in other words, the report’s authors believe the law will reduce the deficit more than CBO projects due to higher taxes on American workers.
  • The report’s assertion of marginally lower premiums compared to the 2019 baseline assumes that “for purposes of this analysis, we exclude changes in premiums associated with better coverage” – purposefully omitting a factor that CBO said would raise premiums in the individual market by 27-30 percent.  Just as important, this exclusion attempts to ignore what the authors likely consider an inconvenient truth: individuals would be FORCED to buy richer policies, since the mandates in the legislation would mean their current insurance would be “insufficient” in the government’s eyes.
  • As might be expected, the report negates the impact on both deficits and spending from an un-offset solution to Medicare physician reimbursements.  But it’s worth reiterating that the President’s budget presumed a whopping $371 billion in new spending on the “doc fix” – and this report neither includes those costs, nor suggests alternative ways to pay for the “doc fix” absent new deficit spending.

The last several weeks have seen a flood of reports – most recently this morning’s Mercer study – indicating that both costs and premiums will rise as a result of this law.  The report makes an attempt to allege that spending $2.6 trillion on a health care law will lower costs.  But its flawed assumptions, omissions, and inaccuracies mean that any independent observer will see the study for what it’s worth: An unsuccessful effort by an Obama advisor to attempt to defend Democrats’ unpopular – and costly – government takeover of health care.

Study Admits: Government Takeover Will Raise Private Insurance Premiums

A study recently published in the journal Health Affairs has confirmed what many have feared—that enrollment in a government-run health plan could cause premiums for private health coverage to skyrocket, as doctors and hospitals charge private patients more to compensate for low government reimbursements:

  • The study followed up on earlier work conducted by independent actuaries at the consulting firm Milliman that found families with private coverage currently pay nearly $1,800 more in health costs to subsidize lower payments made by government-run health plans like Medicare and Medicaid, and attempted to extrapolate the impact of a new government-run health plan on both hospitals’ finances and private health premiums.
  • While the study found that enrolling previously uninsured individuals in a government-run plan paying Medicare reimbursement rates would not adversely affect hospital finances, it also concluded that any subsequent shift of individuals with private coverage into the government-run plan could have disastrous consequences on medical providers. If the government-run plan enrolled even one quarter of individuals currently with private coverage, hospitals’ negative margins on patient care would rise by as much as 50 percent. And if a government-run plan reimbursing at Medicare rates plus 10 percent—more generous than H.R. 3200 as introduced—enrolled 75 percent of those with private coverage, the study “suggests a tripling of cost-shift pressures on [private] premiums.”
  • The study then attempted to use the government-run plan’s impact on hospital finances to project how all providers would shift their costs from the government-run plan to private insurance carriers—and how premiums would rise as a result. The authors concluded that the cost-shift pressures could cause insurance premiums to skyrocket: For a family of four, “The range of increase would be…$3,024-$4,536 nationally.”
  • As significant as those potential increases are, the study’s authors also assume that only about half of the losses stemming from lower government reimbursements would be passed on to private payers in the form of higher costs. If in fact hospitals and providers are unable to make the efficiency gains necessary to absorb 50 percent of the loss, cost-shifting—and private insurance premiums—could rise even higher than the study’s projections.

Independent experts all agree that the legislation proposed would result in millions of Americans losing the coverage they have—the Congressional Budget Office believes several million, the Urban Institute up to 47 million, and the Lewin Group as many as 114 million. Given the results of this new study, many may question why Democrats insist on including a government-run health plan in their takeover of health care—since such a change could result in skyrocketing premiums for those individuals with the audacity to attempt to keep their current coverage.

Myth vs. Fact: President Obama’s Address to Congress

The Republican Conference has prepared analysis of President Obama’s address to Congress on health care rebutting several of his claims:

Quote: “And every day, 14,000 Americans lose their coverage.  In other words, it can happen to anyone.”

Fact: The major coverage expansions in all the legislation being considered would not begin until January 2013—so according to the President’s own methodology, Democrat bills will allow more than 15 million additional Americans to become uninsured.

Quote: “And it’s why those of us with health insurance are also paying a hidden and growing tax for those without it—about $1000 per year that pays for somebody else’s emergency room and charitable care.”

Fact: An even larger tax—of nearly $1,800 per year—is paid by individuals with private coverage who are forced to subsidize lower payments made by government-run health plans like Medicare and Medicaid, according to a study conducted by independent actuaries at the consulting firm Milliman.

Quote: “Nothing in this plan will require you or your employer to change the coverage or the doctor you have.  Let me repeat this: nothing in our plan requires you to change what you have.“

Fact: Independent experts all agree that the legislation proposed would result in millions of Americans losing the coverage they have—the Congressional Budget Office believes several million, the Urban Institute up to 47 million, and the Lewin Group as many as 114 million.

Quote: “Under my plan, individuals will be required to carry basic health insurance – just as most states require you to carry auto insurance.”

Fact: Senior Obama Administration official Sherry Glied has previously written that a mandate “is in many respects analogous to a tax”—and furthermore has the potential to be a “very regressive tax, penalizing uninsured people who genuinely cannot afford to buy coverage.” Thus this policy stance breaks the signal promise of the Obama campaign: “I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”

Quote: “There are also those who claim that our reform effort will insure illegal immigrants.  This, too, is false—the reforms I’m proposing would not apply to those who are here illegally.”

Fact: Nothing in any of the Democrat bills would require individuals to verify their citizenship or identity prior to receiving taxpayer-subsidized benefits—making the President’s promise one that the legislation itself does not keep.

Quote: “And one more misunderstanding I want to clear up—under our plan, no federal dollars will be used to fund abortions, and federal conscience laws will remain in place.”

Fact: The National Right to Life Committee, among other independent pro-life groups, have confirmed that the legislation will result in federal funds being used to pay for abortions—both through the government-run health plan, and through federal subsidies provided through the Exchange, despite various accounting gimmicks created in an Energy and Commerce Committee “compromise.”

Quote: “I will not sign a plan that adds one dime to our deficits—either now or in the future.  Period.”

Fact: The non-partisan Congressional Budget Office has found that H.R. 3200 would increase deficits by $239 billion over ten years—and also found that the legislation “would probably generate substantial increases in federal budget deficits” thereafter. The Peter G. Peterson Foundation released a study today which found that in its second decade, H.R. 3200 would increase federal deficits by more than $1 trillion.

Quote: “Not a dollar of the Medicare trust fund will be used to pay for this plan.”

Fact: Among more than $500 billion in proposed savings from Medicare, the Democrat bills also propose re-directing $23 billion from the Medicare Improvement Fund to fund new health care entitlements. According to current law, the Medicare Improvement Fund is designated specifically “to make improvements under the original Medicare fee-for-service program.”

Quote: “Reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan.  Much of the rest would be paid for with revenues from the very same drug and insurance companies that stand to benefit from tens of millions of new customers.”

Fact: The Congressional Budget Office has previously found that the cuts to Medicare Advantage plans included in the Democrat legislation would result in millions of seniors losing their current plan—a direct contradiction of the President’s assertion that “nothing in this plan requires you to change what you have.”

Quote: “This reform will charge insurance companies a fee for their most expensive policies, which will encourage them to provide greater value for the money—an idea which has the support of Democratic and Republican experts.  And according to these same experts, this modest change could help hold down the cost of health care for all of us in the long-run.”

Fact: While some Republicans support addressing the current employee exclusion for health insurance in the context of overall tax reform, the President’s proposal would raise “fees” in order to finance new federal spending—a tax increase of hundreds of billions of dollars, and one that many Republicans may not support.

Quote: “Add it all up, and the plan I’m proposing will cost around $900 billion over ten years.”

Fact: The Congressional Budget Office, in its score of H.R. 3200 as introduced, found that the legislation would spend approximately $1.6 trillion over ten years—nearly double the President’s estimate.

Quote: “I will continue to seek common ground in the weeks ahead.  If you come to me with a serious set of proposals, I will be there to listen.  My door is always open.”

Fact: On May 13, House Republican leaders all wrote the President a letter reading in part: “We write to you today to express our sincere desire to work with you and find common ground on the issue of health care reform….We respectfully request a meeting with you to discuss areas for potential common ground on health care reform.” Nearly four months later, that meeting has yet to take place.