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Reform without reform

Speaker Pelosi and House Democrats on their way to vote on the health reform bills.
Speaker Pelosi and House Democrats on their way to vote on the health reform bills.
AP Photo/Charles Dharapak

Late last evening the House passed the Senate version of health care reform and then passed the Reconciliation legislation that includes a series of technical fixes to the Senate bill.  The Reconciliation bill must now go back to the Senate for passage or amendment and passage.  In the meantime, the President will sign the Senate version tomorrow and in essence, health care reform (if you can call it that) becomes law.

This past weekend I wrote a series of posts on the process toward passage; technical analysis of the CBO estimates and the bill(s).  Interested readers can find the posts at  Throughout the days up to the final vote, while I was reading the CBO estimate and the totality of legislation (the Senate bill and the Reconciliation bill), I was struck by the 'bait and switch' maneuvering that was occurring within the policy.  It was apparent that I was looking at a skilfully played game of 'three-care Monty'; a lot of slight-of-hand trickery under the heading of health care reform.

I've heard all of the pro-reform politicians and talking heads try to justify how this 'legislation' is reform but honestly, it is impossible to see.  Save a series of government mandates that are targeted at insurance companies (limits on pre-existing conditions, no more life-time maximums, possible price-controls, etc.), none of which will lower the cost of insurance in the near term or improve access or quality, the system remains exactly the same with all of its flaws and costs, etc.

What reform did do (or will do) is make an already expensive and inefficient system teetering on the brink of financial collapse (Medicare and Medicaid) worse off, not better off.  Consider the following.

  • A major source of funding for the new benefits comes from Medicare cuts, $500 plus billion.  Supposedly, these cuts help save Medicare from near-term insolvency but in reality, as they are shifted from Medicare to another source of expenditures, namely a series of new entitlements, Medicare loses $500 billion.  The same is true with the additional revenue from new Medicare taxes on unearned income.  The revenue doesn't go to Medicare, it goes to pay for new spending.
  • If, as has been historically the case, Congress can't hold itself to the Medicare cuts in the legislation, the dollars to pay for the new benefits won't be coming from Medicare, likely from more deficit spending.
  • Medicaid is dramatically expanded as a means of covering the uninsured and a good number of working under-insured individuals.  Unfortunately, the dramatic expansion of Medicaid is only partially funded by the Feds with the rest needing to come from the states.  Nearly every state in the country today has budget woes so severe that the prospect of raising additional funds to cover the Medicaid expansion is unlikely.  Perhaps this is the reason that 30 plus governors are already threatening to the sue the Federal government over this Medicaid expansion provision.
  • Taxes are set to rise substantially and quickly.  An individual earning over $200,000 per year will soon face a federal marginal tax rate of 45%.  When state tax rates are added to this rate, especially in states with high individual tax burdens like Wisconsin, a person making $200,000 or more per year will pay 60% in taxes.  While I know it seems in vogue to 'Robin Hood' these individuals (take from them and give to the poor), these individuals are often small business owners.  Taxing the daylights out of small business owners isn't likely to urge them to create jobs or for that matter, to even stay in business.  I personally think that in a time when overall unemployment plus under-employment is running near 20% nationally that legislation that directly harms small business and job creation is akin to the adage of 'cutting one's nose off to spite one's face'.

As someone who has ridden this process from start to finish (ok, maybe it is not quite finished), I can honestly say that I am disappointed that so little is getting accomplished at such an enormous price.  In this case, the ends were not justified by the means instead, the U.S. Economy will end up with fewer means and the same, if not less, health care.  Hard to believe it takes nearly 3,000 pages to get something so wrong.


  • blue2230 5 years ago

    "You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving.The government cannot give to anybody anything that the government does not first take from somebody else.

  • Chris 5 years ago

    Taxes will go up. 16,000 IRS agents will need to be added to policy the mandatory insurance policy buy. This alone is expected to add almost $ 1 billion to the budget.

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