September 23, 2009
While the bill produced by Finance Committee Chairman Baucus is being portrayed by some media outlets as a "moderate compromise," in reality the legislation could force millions of Americans to lose their current coverage-or pay more for their existing plan-in a government takeover of health care:
- The bill imposes a flat $2,000 limit-one not indexed to inflation-on tax-deductible contributions to Flexible Spending Arrangements (FSAs) beginning in 2013, raising taxes by $16.5 billion over ten years, according to the Joint Committee on Taxation. The Labor Department reports that one third of all private-sector workers have access to FSAs, meaning tens of millions will have their access to a popular form of health coverage restricted.
- The bill doubles the tax penalty for non-qualified withdrawals from Health Savings Accounts (HSAs)-creating harsher penalties for non-qualified HSA withdrawals than those for non-qualified 401(k) or Individual Retirement Account distributions. At least 8 million individuals hold insurance policies eligible for HSAs, and these individuals would be subject to additional restrictions-and tax increases-under this provision.
- Chairman Baucus' mark would eliminate the deduction allowable to employers receiving subsidies from Medicare for providing prescription drug coverage to retired employees. This multi-billion dollar tax increase on employers could result in job losses or businesses dropping retiree drug coverage, meaning seniors could lose their current prescription drug plan.
- The bill cuts $123 billion from Medicare Advantage plans, which according to the Congressional Budget Office (CBO) would result in nearly three million fewer seniors than projected enrolling in the popular program-and would further limit beneficiary choice and access.
- When asked whether he would support an amendment offered by Finance Committee Democrat Bill Nelson ensuring that seniors do not lose their current Medicare Advantage plans, President Obama repeatedly declined to offer such assurances, instead commenting that "change is hard"-implying that seniors will be forced to change their coverage under the President's vision of health "reform."
- While the President stated that "people who are currently signed up for Medicare Advantage are going to have Medicare and the same level of benefits," CBO Director Doug Elmendorf testified that fully half of the benefits currently provided to seniors under Medicare Advantage would disappear due to the Baucus proposals.
- Despite the President's assertion that Medicare Advantage merely subsidizes insurance companies, a Government Accountability Office report found that MA beneficiaries saved an average of $804 per year in reduced cost-sharing and premiums. Plans also use their rebates to provide extra benefits not covered by government-run Medicare, such as dental, vision, and hearing coverage.
- For all these reasons, even Democrats have difficulty supporting their leadership's government takeover of health care; Rep. Michael Michaud, in discussing his "serious concerns about the House bill," noted that "I know they [Democrat leaders] say seniors aren't going to lose their benefits but quite frankly, I think that's a little disingenuous."
Given that most insured Americans are happy with their current plan, many may question the wisdom and necessity of raising taxes and cutting choices to strong-arm them into a new system of bureaucratic mandates-particularly when the richer benefit packages from those mandates will likely raise health costs, not lower them. Moreover, some may question whether the "reforms" being contemplated will soon lead to controls on prices-or limits on access to life-saving treatments-being placed on Americans' coverage to control the skyrocketing costs accelerated by new federal mandates.
For additional information, contact:
The House Republican Conference Policy Office