HarryCare is a Rotten Deal

In God We Trust

HarryCare Is a Rotten Deal

"This is a good deal for the American people," Sen. Tom Harkin boasted on MSNBC Wednesday after the unveiling of Senate Democrats' health care bill. "And I think that the more that they learn what is in this bill, the more they are going to realize that this is really good for the American people."

But should Americans actually delve into the 2,074-page piece of legislation melded together by Senate Majority Leader Harry Reid, they're more likely to recoil at its massive cost, encroachment on individual liberty, and unprecedented expansion of federal government power.

Under the Reid bill, for the first time in the nation's history, the federal government would force Americans to purchase a product merely because they are alive. If Americans do not purchase health insurance that meets the standards established by the Secretary of Health and Human Services, then they will be forced to pay a $750 tax, which will be adjusted over time to account for inflation.

The federal government would force states to create new government-run insurance exchanges on which qualifying Americans could use government subsidies to purchase insurance policies that are designed by the federal government. One of those plans would be a government-run plan, or "public option," which states could theoretically opt out of, but they would not be able to opt out of paying the taxes required to subsidize the startup costs of the plan.

The bill would also force employers to pay a tax to reimburse the federal government for any of its employees who use government subsidies to purchase health insurance. This would increase the cost to businesses of hiring lower-income workers, and thus contribute to higher unemployment among the very group that the bill seeks to help.

About half of the expansion in insurance coverage achieved by the bill would be by expanding eligibility in existing government programs, Medicid and S-CHIP, by 15 million people. In addition to the $374 billion the expansion would cost the federal government from 2010 to 2019, according to the Congressional Budget Office, it would impose $25 billion in new costs on state budgets that are already being crushed by current Medicaid spending.

To pay for the bill, Reid would impose $371.9 billion of new taxes over 10 years, including $67 billion on health insurers; $23 billion in on drug companies; and $20 billion on medical device makers. All of these taxes are likely to be passed directly on to consumers in the former of higher health care costs.

In addition, the bill would tax employer health care plans that cost more than $8,500 for individuals and $23,000 for families. And, during a time of double-digit unemployment, it would hike payroll taxes by 0.5 percent on individuals earning more than $200,000 or couples making $250,000.

In order to get health care legislation passed in the House of Representatives by a narrow 220 to 215-vote margin, Speaker Nancy Pelosi agreed to let pro-life Democrat Bart Stupak hold a vote on an amendment that would ensure that no federal tax dollars were used to pay for abortions. The amendment, which would prevent the government plan from offering abortion and prohibit anybody from using government subsidies to purchase a policy that covered abortion, was approved by 240 members, including 64 Democrats.

Under tremendous pressure from pro-choice groups, Reid did not include the Stupak language in the Senate bill. Instead, the Senate bill mandates that every state insurance exchange must offer a plan that covers abortion in addition to one that does not. It also allows for the government-run plan to cover abortions as long as the HHS Secretary can assure that no federal funds will be used to subsidize the procedure. As for the subsidies, it proposes an unworkable "segregation of funds" that theoretically is supposed to make sure that the actuarial value of the abortion benefit isn't paid for with tax dollars.

Reid and his fellow Democrats spent much of the afternoon touting the CBO analysis, which estimated that the bill would cost $848 billion from 2010 to 2019, and reduce deficits by $130 billion over the period. However, this projection was achieved using the same accounting gimmicks as previous Democratic health care bills, and the same CBO caveats apply.

Just as with the other bills, most of the major spending provisions are delayed so that the bill appears cheaper over CBO's 10-year budget window than it actually is in reality. A closer look at the numbers shows that 99 percent of the spending is weighted in the final six years of the CBO window (2014 to 2019), and 94 percent comes in the final five.

The CBO estimates assume that politically unpopular cuts (mostly to Medicare) will actually get implemented, which the office reminds us is "often not the case for major legislation." The report goes on to say that the bill "would put into effect a number of procedures that might be difficult to maintain over a long period of time."

Eager to project a sense of inevitability, Reid declared on Wednesday that "the finish line is really in sight."

But in reality, even if Reid clears the first procedural hurdle in the Senate by this Saturday by obtaining the 60 votes needed to bring the bill to the floor, he still faces a long amendment and debate process next month before Congress adjourns for the year. Should something pass the Senate, it still has to be reconciled with the House legislation, and then passed in both chambers again, which could be particularly dicey if the Stupak abortion language is stripped in the final bill. And despite what Harkin says, the more the American people learn about what's in this bill, the more they'll oppose it.