Bernie Sanders’ Single Payer Bill Provides Benefits for Billionaires

On Wednesday, socialist Sen. Bernie Sanders plans to introduce the latest version of his single-payer health-care program. If past practice holds, Sanders will call his plan “Medicare for All.” But if he wants to follow Medicare as his model, then the Sanders plan could easily earn another moniker: Benefits for Billionaires.

An analysis released by the Congressional Budget Office (CBO) in August demonstrates how Medicare currently provides significant financial benefits to seniors at all income levels, including the wealthy. Specifically, the CBO paper analyzed lifetime Medicare taxes paid, and lifetime benefits received, by individuals born in the 1950s who live to age 65.

The CBO analysis confirms prior work by the Urban Institute—no right-wing think tank—that Medicare pays out more in benefits than it receives in taxes at virtually all income levels. For instance, according to Urban’s most recent study, a high-earning male turning 65 in 2020 will pay in an average of $123,000 in Medicare taxes, but receive an average of $222,000 in benefits.

Melinda Gates Doesn’t Need Government Health Care

Some may quibble with the work by CBO and Urban Institute for containing an important oversight. In analyzing only Medicare benefits and Medicare taxes paid, the two papers omit the portion of Medicare’s financing that comes from general revenues—including the income taxes paid primarily by the wealthy. While it’s difficult to draw a precise link between Medicare’s general revenue funding and any one person’s income tax payments, it’s possible that—particularly for one-percenters—income taxes paid will offset the net cost of their Medicare benefits.

But regardless of those important details, the larger point still holds. Even if her taxes do outweigh the Medicare benefits received, why does Melinda Gates need the estimated $300,000 in health care benefits paid to the average high-income woman born in the 1950s? Does that government spending serve a useful purpose?

We Don’t Have Money to Subsidize the Rich

Yes, Medicare currently does include some means testing for wealthy beneficiaries, in both the Part B (physician) and Part D (prescription drug) portions of the program. But common sense should dictate first that wealthy individuals not only should be able to opt-out of Medicare if they so choose—because, strange as it sounds, the federal government currently forbids individuals from renouncing their Medicare benefits—wealthy seniors should not receive a taxpayer subsidy at all. Whether in Medicare or Sanders’ socialist utopia, the idea that Warren Buffett or Bill Gates warrant taxpayer subsidies defies credulity.

Despite this common-sense logic, liberals continue to support providing taxpayer-funded benefits for billionaires. In 2011, then-Rep. Henry Waxman (D-CA) said “if [then-Speaker John] Boehner wants to have the wealthy contribute more to deficit reduction, he should look to the tax code.” Perhaps Waxman views keeping wealthy seniors in Medicare as a form of punishment for the rich. After all, nearly nine in ten seniors have some form of supplemental insurance, and a form of “insurance” one must insure against may not be considered an unalloyed pleasure.

Regardless, Medicare faces its own financial reckoning, and sooner rather than later. In 2009—the last trustees’ report before Obamacare introduced fiscal gimmicks and double-counting into Medicare—the program’s actuaries concluded Medicare’s Hospital Insurance Trust Fund would become functionally insolvent this year. Given that bleak outlook, neither Medicare nor the American people can afford Sanders’ ill-conceived scheme to provide taxpayer-funded health benefits to wealthy 1-percenters.

This post was originally published at The Federalist.

Democrats’ Hypocrisy on the Trump Budget

As expected, the Left had a harsh reaction to President Trump’s first budget on its release Tuesday. Bernie Sanders called the proposed Medicaid reductions “just cruel,” the head of one liberal think-tank dubbed the budget as a whole “radical,” and on and on.

But if liberals object to these “draconian cuts,” there’s one potential solution: Look in the mirror.

And exactly who might be to blame for creating that toxic environment?

Democrats Are Using The ‘Mediscare’ Playbook

Democrats have spent the past several political cycles running election campaigns straight out of the “Mediscare” playbook. In case anyone has forgotten, political ads have portrayed Republicans as literally throwing granny off a cliff.

This rhetoric about Republican attempts to “privatize” Medicare came despite several inconvenient truths:

  1. The “voucher” system Democrats attack for Medicare is based upon the same bidding system included in Obamacare;
  2. The Congressional Budget Office concluded one version of premium support would, by utilizing the forces of competition, actually save money for both seniors and the federal government; and
  3. Democrats—in Nancy Pelosi’s own words—“took half a trillion dollars out of Medicare” to pay for Obamacare.

Given the constant attacks from Democrats against entitlement reform, however, Donald Trump made the political decision during last year’s campaign to oppose any changes to Medicare or Social Security. He reiterated that decision in this week’s budget, by proposing no direct reductions either to Medicare or the Social Security retirement program. Office of Management and Budget Director Mick Mulvaney said the president told him, “I promised people on the campaign trail I would not touch their retirement and I would not touch Medicare.”

That’s an incorrect and faulty assumption, of course, as both programs rapidly spiral toward insolvency. The Medicare hospital insurance trust fund has incurred a collective $132.2 billion in deficits the past eight years. Only the double-counting created by Obamacare continues to keep the Medicare trust fund afloat. The idea that President Trump should not “touch” seniors’ retirement or health care is based on the fallacious premise that they exist beyond the coming decade; on the present trajectory, they do not, at least not in their current form.

Should Bill Gates Get Taxpayer-Funded Healthcare?

That said, the president’s reticence to “touch” Social Security and Medicare comes no doubt from Democrats’ reluctance to support any reductions in entitlement spending, even to the wealthiest Americans. When Republicans first proposed additional means testing for Medicare back in 2011, then-Rep. Henry Waxman (D-CA) opposed it, saying that “if [then-House Speaker John] Boehner wants to have the wealthy contribute more to deficit reduction, he should look to the tax code.”

In other words, liberals like Henry Waxman, and others like him, wish to defend “benefits for billionaires”—the right of people like Bill Gates and Warren Buffett to receive taxpayer-funded health and retirement benefits. Admittedly, Congress passed some additional entitlement means testing as part of a Medicare bill two years ago. But the notion that taxpayers should spend any taxpayer funds on health or retirement payments to “one-percenters” would likely strike most as absurd—yet that’s exactly what current law does.

As the old saying goes, to govern is to choose. If Democrats are so violently opposed to the supposedly “cruel” savings proposals in the president’s budget, then why don’t they put alternative entitlement reforms on the table? From eliminating Medicare and Social Security payments to the highest earners, to a premium support proposal that would save seniors money, there are potential opportunities out there—if liberals can stand to tone down the “Mediscare” demagoguery. It just might yield the reforms that our country needs, to prevent future generations from drowning in a sea of debt.

This post was originally published at The Federalist.

King v. Burwell and Congressional Intent on Insurance Subsidies

In the big case to be argued before the Supreme Court on Wednesday, supporters of the health-care law maintain that nonpartisan congressional analyses of Obamacare make clear that lawmakers intended on making subsidies available to individuals in all states, even if the precise language is open to interpretation.

But  in at least one other case, the law’s supporters took the opposite tack—ignoring a bipartisan congressional analysis that came up with a conclusion they didn’t like.

Here is what’s happening:

King v. Burwell, the case to be heard Wednesday, centers on the legality of insurance subsidies being provided in states that use the federal platform. Some congressional sponsors of the health-care law have said that they clearly intended to make subsidies available to individuals in all states, regardless of whether states used their own or the federal insurance exchange.

In op-eds and amicus briefs, several members of Congress have argued that an Internal Revenue Service rule proposed in August 2011 and finalized in May 2012 that extended subsidies to individuals in both state- and federally run insurance exchanges was consistent with their intent at the time the health-care law was passed. The Congressional Budget Office “came to the same conclusion,” five lawmakers wrote in the Washington Post last October. The legislators say that because CBO assumed that subsidies would be available in all 50 states, as expressed by CBO scores for the bill when it passed, Congress’s intent was clear. But on a different issue of interpretation, several of the law’s authors undermined that logic.

The issue that prompted the about-face involves the “family glitch” related to eligibility for insurance subsidies. If one parent is offered health insurance through an employer, the entire family does not qualify for subsidies to purchase coverage through the marketplace. In March 2010, the same week the health-care bill was signed into law, the Joint Committee on Taxation issued an analysis of the legislation that said, in part, that even though “family coverage costs more than 9.5 percent of income, the family does not qualify for a tax credit regardless of whether the employee purchases self-only coverage or does not purchase self-only coverage through the employer.”

The same August 2011 proposed rule that prompted King v. Burwell also included Treasury proposals to codify the “family glitch,” consistent with the March 2010 technical explanation provided by the Joint Committee on Taxation. Yet Reps. Sander Levin and Henry Waxman—who, respectively, chaired the House Ways and Means Committee and the House Energy and Commerce Committee when the ACA was passed—wrote to Treasury in December 2011 complaining about this interpretation of the statute. Their letter argued that the Treasury interpretation of the glitch was “simply incongruent” with congressional intent and a “wrong interpretation of the law.”

When it came to the exchange subsidies, the Congressional Budget Office undertook no textual analysis of the statutory provisions at dispute in King v. Burwell. But the Joint Tax Committee did. It released a contemporaneous analysis of the provisions at issue with respect to the “family glitch.” Although Mr. Levin and Mr. Waxman say CBO’s silence suggests a presumption that subsidies should be available in all 50 states, they disregarded the contemporaneous analysis by the Joint Committee on Taxation.

Now, the former House committee chairmen could have been unaware of the JCT analysis at the time the law was passed. They could wish to argue for the most generous subsidy regime possible, regardless of the law’s technical specifics. There may be some other policy or political explanation.

But this situation highlights the pitfalls of claims regarding a law’s intent. All types of retrospective analyses could turn into self-justifying ones—which may provide little use to courts attempting to discern what a statute actually means.

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

How About MEDICAID For Members?

The Twitterverse exploded with outrage today, following last night’s Politico story indicating that congressional leadership have engaged in secret conversations attempting to craft an Obamacare waiver for Members of Congress and/or their staffs.  As with the rest of Obamacare, the problem lies in the botched way the legislation was enacted — drafted in secret, then rammed through Congress on a party-line vote.  Harry Reid drafted this particular section of the bill behind closed doors; Senator Grassley later offered an amendment clarifying the provisions, but Democrats defeated it three years ago. (Text of the Grassley amendment available here; my summary of the amendment here; Senate floor vote here).  So there’s one important principle at play: Having rammed the bill through while claiming that reading the bill was a waste of time, because we had to act “real fast” and didn’t have two lawyers over two days to understand the legislation, Democrats now want to exempt themselves from the mess they created.  As we’ve said before, you break it, you own it.

But there’s another important principle as well regarding Members’ health coverage, and the ongoing state-level debate regarding Obamacare’s expansion of Medicaid: How many state legislators who want to expand Medicaid FOR OTHERS want to go on Medicaid THEMSELVES?  We know the answer to this question at the federal level — Sen. LeMieux offered a “Medicaid for Members” amendment in March 2010, which received not a single vote from Senate Democrats. (Text of the amendment here; my summary here; Senate floor vote here.)  In 2009, Rep. Henry Waxman publicly admitted that “it is highly unlikely that you are going to find millionaires who would like to go on Medicaid.”  In other words, Medicaid provides such inferior coverage that millionaires — and wealthy Members of Congress — wouldn’t dream of enrolling in it themselves, but have no qualms about putting low-income individuals on this “insurance.”

So to the original story: The root problem is not that Congress drafted the law sloppily — although that did happen in spades.  The problem is that not enough individuals have been exposed to Obamacare’s underlying flaws.  Because it’s easy to see how requiring federal and state representatives to go on Medicaid themselves would make many legislators much less enthusiastic about expanding “coverage” under Obamacare.

Henry Waxman, Liberals, and Medicaid

The Hill reported last night that liberals are calling for the massive Medicaid entitlement to be left unchanged in talks related to the fiscal cliff.  For instance, House Energy and Commerce Committee Ranking Member Henry Waxman said that “If you want to boil it down to one message: Keep your hands off the Medicaid program.”

This is an interesting statement from Mr. Waxman, given comments he made nearly four years ago.  In early 2009, during the markup of the “stimulus” bill, then-Chairman Waxman opposed an amendment to prohibit millionaires from receiving Medicaid benefits, on the grounds that “I think it is highly unlikely that you are going to find millionaires who would like to go on Medicaid.”  Unfortunately, however, he never explained why he thought that millionaires – who of course can afford to buy most any type of health insurance – would turn down Medicaid coverage, given that the program provides “free” coverage of medical treatments without charging premiums or other cost-sharing.

In other words, Henry Waxman wants to leave untouched an insurance program for millions of poor Americans even though – by his own admission – those who can afford insurance categorically reject Medicaid.  By any reasonable standards, that’s not “reform.”

What We Learned About the CLASS Act Today

This morning the Energy and Commerce Committee held a hearing regarding the demise of the CLASS Act Ponzi scheme.  Here’s just some of what we learned about the program, and the regulatory and actuarial debacle the Administration announced earlier this month:

Robust Debate on Scoring:  Assistant Secretary Glied attempted to defend the Administration’s decision to disregard the warnings of the many independent experts regarding CLASS’ solvency by saying that there is always a “robust debate” about modeling and scoring issues related to any piece of legislation.  If that’s the case, and there’s always a significant margin of error when it comes to fiscal scorekeeping, then why are Democrats so absolutely certain that the rest of the law will reduce the deficit…?

Administration Misinformation:  Assistant Secretary Greenlee announced that HHS has in fact closed the CLASS Act office, and ceased all CLASS-related implementation activities.  This admission comes one month after a White House official called a report that the CLASS office was closing “flat-out false” and a “false rumor.”

Wasteful Government Spending:  Assistant Secretary Greenlee testified that HHS spent $5 million in taxpayer dollars in 2010 and 2011 attempting to implement what even Democrats called a “Ponzi scheme of the first order.”  This is a more than 100% increase in spending over the last three months; in August, HHS said in a letter to Senators Thune and Shelby that HHS had spent only $2.2 million on CLASS.

Timing is Everything:  Assistant Secretary Greenlee admitted that CLASS actuary Bob Yee’s report was received on September 20 – and two days later, Yee announced in a now-famous e-mail that he would be leaving the Department.  The timing raises obvious questions about whether Yee was forced out due to his report, along with why the CLASS actuary left the Department at a time when all other CLASS employees were merely re-assigned.

Sebelius Asleep at the Switch?  Assistant Secretary Glied declined repeated requests to admit that Secretary Sebelius was ever informed about the inadequacies of her own Department’s modeling of CLASS.  If that’s the case, why did HHS officials publicly claim in October 2009 that HHS was “entirely persuaded that…financial solvency over the 75-year period can be maintained?”  Just as important, how can Secretary Sebelius implement a 2,700 page law if she was so detached from fundamental questions about whether or not an $86 billion program was actually solvent?

Hiding Internal Dissent:  Assistant Secretary Glied declined repeated requests to admit that the concerns of HHS staff about CLASS’ solvency were relayed to the public or to Congress prior to PPACA’s enactment.  In other words, no one told Congress prior to the bill’s passage that the career employees trying to implement CLASS thought the program was a “recipe for disaster.”

More Mandates Ahead?  In one exchange, Assistant Secretary Glied and former Chairman Waxman agreed that the reason several proposals to “fix” CLASS would have imposed pre-existing condition exclusions was because all Americans would not be covered – in other words, individuals could opt-out of CLASS.  The implicit “solution” to that problem would be another unprecedented – and constitutionally dubious – mandate requiring all Americans to participate in the program, a step which former Obama Administration Cabinet official Peter Orszag has endorsed.  Of course, Glied herself has written that a mandate would be largely “symbolic,” meaning that any impact of a mandate to participate in CLASS – or to buy health insurance – would be largely ineffective.

The hearing as a whole did not answer the fundamental questions about what the Administration knew, and when, regarding this massive debacle – particularly given that experts have been predicting the program’s failure for years.  Moreover, the frequent bureaucratic bungling regarding the CLASS Act outlined this morning raises broader questions about how HHS can effectively and efficiently implement the sprawling $2.6 trillion health care law.

CLASS Act Scandal: Bigger Than Enron?

The Administration’s Friday decision not to go forward with CLASS implementation means that the program has now been definitively exposed as an accounting gimmick, with $86 billion in “deficit savings” wiped away in an instant.  Yet Democrats’ reaction to these vaporized savings has been decidedly ho-hum:  HHS dumped their decision out on a Friday afternoon, leading Democrats in both chambers have not a thing on their websites about the CLASS developments, and liberal bloggers are even arguing that the government “worked exactly the way it ought to.”

Compare that (non-)reaction to the Enron scandal, which reached its peak almost exactly one decade ago.  Enron’s accounting shenanigans wiped out $70 billion in shareholder value – $16 billion LESS than went “Poof!” when the CLASS Act collapsed on Friday.  And in 2001, Democrats reacted with righteous fury to the Enron scandal.  For instance, Henry Waxman established an “Enron tipline” on his website, called the company’s collapse “breathtaking,” and said the executives’ behavior was an “outrage.”

So where’s the outrage from Democrats here?

  • Will Henry Waxman be establishing a “CLASS tipline,” to see whether any HHS employee whistleblowers might have insights into why the many independent warnings about CLASS were ignored?
  • Why do liberals say the vaporization of tens of billions of shareholder equity is a massive outrage, but government $86 billion in “deficit savings” evaporating in an instant doesn’t merit a word of mention?
  • If a private company – and not the government – announced that a Madoff-esque scheme wiped out more shareholder value than occurred with Enron, would liberals claim such a scenario meant the private sector “worked exactly the way it ought to…?”

There is however one big difference between Enron and CLASS: Democrats knew about the CLASS Act’s problems all along.  The non-partisan Medicare actuary knew from Day One the plan wouldn’t work, and even Budget Committee Chairman Conrad called the program a “Ponzi scheme of the first order.”  That fact makes Democrats’ deafening silence on the program’s entirely predictable failure that much more telling.

Henry Waxman Defends Benefits for Billionaires

The liberal website Talking Points Memo noted this week that in his speech Monday regarding the debt limit, Speaker Boehner supported the idea of means-testing Medicare for wealthy individuals – questioning whether federal taxpayers should be subsidizing the health care benefits of those like Pete Peterson, the billionaire founder of Blackstone Group and head of a fiscal responsibility foundation.  That prompted this retort from California’s Henry Waxman: “Medicare is a social insurance program where you get back for paying in, whether you are middle class, poor, or rich.  If Mr. Boehner wants to have the wealthy contribute more to deficit reduction, he should look to the tax code.”

To summarize:  Rep. Waxman would have the federal government raise taxes on the wealthy to pay for taxpayer-subsidized benefits (i.e., Medicare and Social Security) for these same individuals.  The difference between the two philosophies is clear:  Withdrawing taxpayer-funded benefits (particularly Medicare benefits, which are non-financial in nature) from wealthy individuals will NOT have an economic impact – but raising taxes on job creators WILL.  If Democrats are interested in “soaking the rich” at a time of high unemployment, why are Democrats focused on the side of the equation that will harm jobs – rather than questioning why Warren Buffett and Pete Peterson need taxpayer-financed benefits in the first place?

Adding to this absurdity is that the federal government is already forcing individuals to purchase government-run health care, by prohibiting them from opting out of Medicare.  So at a time of trillion-dollar deficits, federal taxpayer dollars are being used to defend in court a policy that FORCES individuals like Warren Buffett to purchase government-run health care (and, at least in some cases, give up their private coverage in the process).

Thankfully at least Democrats who have expressed some support for placing income-related tests on taxpayer funded benefits.  But if Democrats seek credibility on entitlement and deficit reform, they might want to arrive at a better reason to raise taxes on job creators than to finance Warren Buffett’s health care or Bill Gates’ pension.

Democrats Ask HHS: Protect Us from the Law We Passed…

Yesterday a series of senior House and Senate Democrats wrote a letter to Secretary Sebelius asking CMS to “undertake a robust and thorough review” of Medicare Advantage plan bids for 2011.  The letter further noted that “any effort by MA plans to increase beneficiary premiums or reduce benefits next year should be carefully evaluated.”

This letter is curious on several levels.  First, the Administration just spent 18 million taxpayer dollars sending out leaflets talking about the new health law’s “Improvements to Medicare Advantage.”  If Medicare Advantage is so improved, why do Democrats think that plans may need to increase premiums or reduce benefits?

The answer is readily apparent in data from non-partisan actuaries in both the Congressional Budget Office and CMS itself.  First, CBO confirmed that the health law will cut more than $200 billion from the MA program.  Then CMS actuaries estimated that those cuts would slash beneficiary participation in half – from an estimated 14.8 million all the way down to 7.4 million.  The actuaries also found that the law’s “provisions will generally reduce MA rebates to plans and thereby result in less generous benefit packages.”

In other words, Democrats are criticizing reduced MA benefits to seniors, even though they passed a law that non-partisan experts agreed would do just that.  Might they have suddenly changed their position because they had to pass the bill to find out what was in it?


June 3, 2010

The Honorable Kathleen Sebelius
Department of Health and Human Services
200 Independence Avenue, SW
Washington, DC 20201

Dear Secretary Sebelius:

As you know, the statutory deadline for Medicare Advantage (MA) plans to submit their bids that outline benefits and premiums for 2011 is June 7th. We are writing to urge you to ensure that the Centers for Medicare and Medicaid Services (CMS) undertake a robust and thorough review of their bid submissions to justify changes in the premiums or benefits that plans may propose for next year. To promote stability in the program, the health reform legislation protected 2011 plan payment rates and took care to phase in future payment changes to minimize disruption. Any effort by MA plans to increase beneficiary premiums or reduce benefits next year should be carefully evaluated in light of these payment protections.

Substantial errors made by WellPoint in projecting medical cost trends in California for 2011—uncovered and corrected only after a rigorous assessment of the company’s rate filing documents—are an example of the kind of review that would protect Medicare beneficiaries and the program from unjustified premium increases or benefit changes. The Office of the Actuary at CMS already collects detailed actuarial information in the bid submissions and has statutory authority to request additional documents as needed during the bid reviews.
In addition, according to a Government Accountability Office (GAO) report requested by the House Committees on Ways and Means and Energy and Commerce, lower beneficiary premiums for certain MA plans in 2008 attracted healthier enrollees, but if those enrollees became ill they faced considerable and unexpected out-of-pocket expenditures that often exceeded Medicare fee-for-service limits by significant amounts.

The Affordable Care Act provides additional authority to protect beneficiaries from MA plans that offer discriminatory benefit packages. In particular, it limits the ability of these plans to charge higher cost-sharing than fee-for-service Medicare in three specific categories where abuses are well-documented and provides the Secretary with authority to extend this protection to additional services as needed. The Affordable Care Act also removes unwarranted overpayments that have caused Medicare Advantage to cost more than Medicare fee-for-service, shortened the solvency of the Medicare trust fund, and led to higher premiums for the more than three-quarters of beneficiaries in traditional Medicare. In phasing out these overpayments, CMS must ensure that plans work to trim administrative costs and other overhead, rather than merely shifting additional costs onto beneficiaries to preserve their bottom line.

The Affordable Care Act increases the authority vested in the Secretary to hold MA plans accountable for their bid submissions. Using this authority, we expect the Secretary and officials at CMS to ensure that the bid proposals are accurate, merit approval and are not discriminatory in benefit design or relative to plan payments.

We look forward to continuing to work together to ensure appropriate implementation of the Affordable Care Act. Thank you for your attention to this important matter.

Obamacare’s First Week: Where’s the Reform?

One short week after President Obama signed his health care overhaul into law (P.L. 111-148), a string of press stories has already revealed the broken promises, double standards, and economic damage created by Democrats’ government takeover of health care:

Broken Promises: On the very day the President signed the health care bill into law, an Associated Press article highlighted that one of Democrats’ immediate “deliverables”—a ban on pre-existing condition exclusions for children—“provided a less-than-complete guarantee that kids with health problems would not be shut out of coverage.”[i] Specifically, while the law requires insurance companies to cover all pre-existing conditions for children enrolled in their policies, it permits carriers to deny new applications outright. Thus this “reform” could have the perverse incentive of encouraging insurance companies not to accept children with pre-existing conditions at all, rather than imposing some limitations on their coverage.

Likewise, news articles have pointed out that the funding for a national high-risk pool may be insufficient to meet the coverage needs of all individuals with pre-existing conditions.[ii] The pool, which the law requires be established within 90 days, received only $5 billion in funding to last through 2014.[iii] As states’ risk pools spend a total of $2 billion annually, it seems unlikely that $5 billion could meet both existing and expected demand—raising the prospect of yet more federal spending on health care to meet the new influx, or no coverage options for individuals with pre-existing conditions.[iv]

Double Standards: While the Senate was debating a reconciliation bill designed to “fix” problems in the original health care law, press reports focused on another loophole that exempted some from the law’s requirement that Congressional staff obtain their health benefits in the new exchanges, beginning in 2014.[v] Many considered it an “inequity” and an “outrage” that staff in leadership and committee offices—including the staff for the Democrat leaders who wrote the health bill—would be exempted from the law’s new regime.[vi] Yet when Republicans offered an amendment to close this loophole, and to make sure that executive branch political appointees—including officials in the Departments of Health and Human Services and Treasury charged with implementing the law—would also receive their health benefits through the new exchanges, 56 Democrats voted to kill this common-sense reform.[vii]

Economic Damage: Within days of the bill being signed into law, companies came forward to revise their balance sheets, reflecting the damage that the law’s new taxes would have on their earnings. Caterpillar went first, taking a $100 million hit due to loss of a tax subsidy for providing retiree prescription drug coverage;[viii] John Deere[ix] and AT&T[x] followed, reporting impacts of $150 million and $1 billion, respectively. The actions by these three companies represented the leading edge of an expected $14 billion drop in corporate earnings as a result of the law’s enactment—losses that will harm businesses’ ability to grow and re-hire workers in the middle of a struggling economy.[xi] Perhaps most ominously, AT&T noted that it “will be evaluating prospective changes to the active and retiree health care benefits offered by the company” as a result of the bill’s passage, proving the falsehood of President Obama’s claim that “If you like your current plan, you can keep it.”[xii]

Just as worrisome, the market for Treasury bonds suffered a drop-off in demand last week, as “passage of [the] health bill rekindle[d] worries about rising deficits.”[xiii] If the health law results in a rapid spike in interest rates as investors lose confidence in America’s ability to curb skyrocketing federal spending, mortgage buyers and businesses large and small will suffer.

In addition, states must work to calculate the cost of the law’s many unfunded mandates on their Medicaid programs. California’s department of health estimated that raising physician reimbursements in Medicaid will alone cost $2 billion per year, which may be passed on in the form of additional job-killing taxes at the state level on top of the more than $500 billion in new federal taxes already enacted into law.[xiv]

Unfortunately, rather than re-evaluating the scope and breadth of their health care takeover in a way that would not wreak havoc on the nation’s struggling economy, Democrats seem intent on “shooting the messenger” by extracting retribution for companies that dare speak politically inconvenient truths. The House Energy and Commerce Committee scheduled an April 21 hearing to examine the claims made by Caterpillar and others that the law will increase their taxes and health care costs. Committee Chairman Henry Waxman wrote a threatening letter to the companies demanding a rash of information, and calling the companies’ assertions about rising costs “a matter of concern”—leading some to question whether the entire hearing stands as an attempt to intimidate companies who have the temerity to challenge Democrats’ rosy view of health care “reform.”[xv]

With losses for companies already piling up, promises broken, and Democrats voting to exempt the officials charged with implementing the new law from most of its direct effects, many may wonder how the first week of Democrats’ brave new health care world in any way resembles the “reform” promised by President Obama and the majority.


[i] Ricardo Alonso-Zaldivar, “Gap in Health Care Law’s Protection for Children,” Associated Press March 24, 2010,

[ii] Anna Wilde Mathews, “High-Risk Health Pool Faces Start-Up Hurdles,” Wall Street Journal March 27, 2010,

[iii] Ibid.

[iv] Ibid.

[v] Erika Lovley and Patrick O’Connor, “Health Bill May Exempt Top Hill Staff,” Politico March 24, 2010,

[vi] Ibid.

[vii] Senate Record Vote 69 of 2010,

[viii] Bob Tita, “Caterpillar Takes Hit on Health Care,” Wall Street Journal March 25, 2010,

[ix] “Deere Sees $150 Million Hit from Health Care Reform,” Reuters March 25, 2010,

[x] “AT&T to Book $1 Billion Cost on Reform,” Bloomberg March 26, 2010,

[xi] “Obama Tax’s $14 Billion Charge Starts at Caterpillar,” Bloomberg March 25, 2010,

[xii] “AT&T to Book $1 Billion Cost.”

[xiii] Tom Lauricella, “Debt Fears Send Rates Up,” Wall Street Journal March 26, 2010,

[xiv] Michael Luo, “Some States Find Burdens in Health Law,” New York Times March 27, 2010,

[xv] Byron York, “Democrats Threaten Companies Hit Hard by Health Care Bill,” Washington Examiner March 29, 2010,