Wednesday, March 24, 2010

Question and Answer: Health Care and Student Loan Takeover

The Senate Republican Policy Committee has compiled background on many popularly asked questions about Democrats’ government takeover of health care and student loans in reconciliation (H.R. 4872) and the health care bill (H.R. 3590) that was recently signed into law.

Is this bill a net tax cut for the American people?

  • This bill authorizes the U.S. Treasury to cut $460 billion in checks that go straight to insurance companies to cover health insurance subsidies for less than 10 percent of the population.
  • According to the non-partisan Joint Committee on Taxation (JCT), 73 percent of the subsidy will be paid on behalf of taxpayers with no tax liability – this cannot be a tax cut since you can’t cut taxes for people who do not pay them.
  • The 90 percent of Americans who do not receive a subsidy in the exchange will receive nothing except the status quo of rising premiums and tax increases.

Does the law adhere to then-Senator Obama’s campaign promise not to raise taxes on individuals with incomes under $250,000—“Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes?”

  • The law imposes a tax on all individuals who do not obtain health coverage through their employer or do not purchase government approved insurance offered through a government-run exchange.
  • The bills do not include an exemption for individuals with incomes under $200,000, raising taxes on 73 million Americans earning less than $200,000 and breaking a central tenet of President Obama’s campaign.

Would the legislation reduce the growth of health costs—President Obama’s stated goal for health reform?

  • An analysis by actuaries in the Obama Administration’s Centers for Medicare and Medicaid Services found the Senate bill would raise overall national health care spending over the coming decade.
  • The health reform law and companion reconciliation bill would raise the federal budgetary commitment to health care by a combined $390 billion in the next ten years, according to the Congressional Budget Office.
  • In a letter to Senator Evan Bayh, the independent Congressional Budget Office (CBO) found that premiums would continue to go up over $1,000 a year for most Americans, and would only go down for those receiving a government subsidy.

Do the student loan provisions add one trillion to the national debt over 10 years?

Does the bill raid student aid for college in order to pay for health care?

  • Approximately $9 billion in education savings will be diverted from students to help pay for the cost of the Obama Administration’s health care proposal.

Does the bill make the U.S. Department of Education one of the nation’s largest banks?

  • With Direct Loans estimated to loan out $100 billion every year (or $1 trillion over 10 years) from the federal coffers, the outstanding balance of loans at the U.S. Department of Education will now be on par with banks such as Goldman Sachs and Morgan Stanley.

Does the bill adhere to President Obama’s promise that health care legislation be deficit-neutral?

  • According to the CBO score, health reform is deficit neutral only if the federal government cuts payments to Medicare physicians by more than 21 percent in 2010, which it will not.
  • CBO found that including a so-called “doc fix,” which Democrats will surely do this year, will cause health reform to increase deficits by $59 billion.
  • The bill appears deficit neutral because of a series of budget gimmicks, which include delaying spending until the end of the budget window, the CLASS Act, which Senator Conrad called “a Ponzi scheme of the first order,” raiding $29 billion in Social Security revenue to pay for a new entitlement, and double counting $529 billion in Medicare cuts and up to $210 billion in new Medicare taxes as both improving Medicare’s solvency and paying for this massive entitlement expansion.

Do the bills adhere to Democrats’ promise that “If you like the plan you have, you can keep it?”

  • CBO found that under the law, as many as 10 million individuals would lose their current coverage.
  • In addition, the law’s massive cuts to Medicare Advantage would result in millions of seniors losing access to the critical extra benefits which these plans provide.

Will the law destroy jobs?

  • The health bill includes over $500 billion in tax increases, including $210 billion in new investment taxes and a Medicare payroll tax, and $52 billion from a new tax on employers who fail to provide government-approved health insurance.
  • CBO has said that the costs of the employer mandate will be passed to workers, who will see lower wages, fewer full-time jobs, and more outsourcing.
  • The law also includes a “fair share” mandate which the Center for Budget and Policy Priorities previously noted would discourage employers from hiring married individuals or parents raising children.
  • The government takeover of the student loan market could result in the loss of 35,000 private sector jobs, replacing them with more government bureaucrats or contractors and dramatically increasing the size of the federal government.

Will the law adversely affect some of those most impacted by the recession?

  • CBO has confirmed that the mandates in the legislation “could reduce the hiring of low-wage workers,” and could also lead to wage stagnation as wage compensation is diverted to comply with new federal taxes and mandates.
  • Harvard Professor Kate Baicker has published an analysis demonstrating that minority workers would be twice as likely to lose their jobs as their white counterparts.
  • At a time when nearly one in six African-Americans and more than one in four teens are unemployed, these harmful tax increases will hurt exactly the low-wage and minority workers that health reform is intended to help.

Will the law fund abortion coverage using taxpayer dollars?

  • Provisions in the law 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. Such provisions violate the long-standing policy of the insurance coverage offered to Members of Congress—which provides a choice of private plans, none of which may cover elective abortions.

Does the law provide immediate coverage for children with pre-existing conditions?

  • An Associated Press fact-check analysis concluded that “insurance companies still would be able to refuse new coverage to children because of a pre-existing medical problem.”