Latest White House Health Care Proposal - The Same Big Government Takeover

Latest White House Health Care Proposal: The Same Big Government Takeover

FEBRUARY 22, 2010

On February 22, 2010, the President released a summary of his latest health care proposal in advance of the "bipartisan" health care summit later in the week, where Democrats will attempt to rekindle momentum for their government takeover of healthcare.  The President's 11-page proposal melds elements of the House and Senate-passed health care bills along with new provisions.  However, the White House has not revealed legislative text and no CBO score is yet available.  Highlights of the proposal are as follows:

Cadillac Plans:  The White House proposal would tax high-cost private health plans known commonly as "cadillac plans."  The proposal would increase the taxable threshold above the Senate level, from $8,500 to $10,200 for an individual and from $23,000 to $27,500 for a family.  This excise tax would break two central Obama campaign promises-not to raise taxes on those with incomes under $250,000, and not to tax employer-provided health insurance policies.  It would also delay the implementation of the new tax from 2013 under the Senate bill until 2018.  According to the President's proposal, the tax would be lowered for individuals in "high risk occupations."  The plan does not specifically say how labor unions-which were exempted from the tax under a deal made with the President months ago-would be treated.   However, according to Congress Daily, White House spokesman Dan Pfeiffer "indicated a deal with unions to exempt collectively bargained plans is still in place."

Job Killing Taxes:  The President's proposal nearly triples the employer mandate tax from what passed the Senate, increasing the tax from $750 per employee obtaining subsidized coverage via the Exchange, to $2,000 per employee.  The President increases the Medicare payroll tax to include non-wage income like dividends, interest and capital gains, imposing a new 2.9% tax on this income.  This tax is levied on business income that are economic drivers and job creation engines, and the results may be to force firms to cut costs, stop hiring, or even lay off employees.  Both taxes would reduce wages over time for current employees and make job creation more difficult.

Spending:  According to the White House, the proposal would cost approximately $950 billion over the next decade.  Compared to the House-passed bill, which spent $1.3 trillion, and the Senate bill which spent $871 billion, the President's newest health care takeover is far from a "bipartisan" compromise.  The President ignores policies in the Republican health care alternative that could lower the deficit and bring down the cost of premiums by up to 10 percent.  It should also be noted that CBO released a letter stating that they "cannot provide a cost estimate for the [President's] proposal without additional detail."

Affordability Subsidies:  The President's plan provides billions in tax credits and cost sharing subsidies in order for the federal government to pay for a portion of the cost of health care insurances, which it mandates the purchase of.  The federal subsidies in the President's plan would cover between 73 percent and 94 percent of health insurance costs for individuals and families with incomes between $29,000 and $88,000.

Health Insurance Rate Authority:  The proposal would create a new Health Insurance Rate Authority to allow the government to set price controls when it is determined that insurance premium increases are "unreasonable."   Private insurance providers would be required to submit any proposed increase in premiums to the government and could then be forced by the government to lower their rates or provide some sort of rebate.  The Authority would "monitor insurance market behavior" and determine how prices will be reviewed and controlled by the government.  Of course, like any price control, this proposal would lead to a shortage of private health care insurance options, meaning more individuals would have to rely on the government exchange.

Abortion Coverage:  The House-passed bill would not allow federal funds to flow to private insurance plans that cover elective abortion, nor fund elective abortion in the proposed new government administered exchanges.  However, provisions in the Senate bill would undermine both protections inserted into the House bill-the Senate measure would permit funds to flow to private plans that cover elective abortion, and create new national health plans administered by the Office of Personnel Management (OPM) that would cover elective abortions.  The President's proposal capitulates to the Senate bill, and does not include the House protection of the unborn.