Bad for Low-Income Households-Speaker Pelosi’s Health Care Takeover

Bad for Low-Income Households-Speaker Pelosi’s Health Care Takeover

November 2, 2009

NOVEMBER 2, 2009

The Republican Conference has compiled a list of provisions in the Pelosi health care bill that would harm individuals and families of modest economic means:

Millions of Jobs at Risk.  H.R. 3962 would impose a new tax on jobs by forcing employers who do not provide "acceptable" coverage to pay a tax equal to 8 percent of payroll.  Harvard Professor Kate Baicker has also published an analysis demonstrating that at least 5.5 million low-wage workers would be "at substantial risk of unemployment" due to new mandates on employers.  Her analysis also found that minority workers were twice as likely to lose their jobs as their white counterparts.

Lower Wages.  A recent Congressional Budget Office report, while noting that, "a pay-or-play provision could reduce the hiring of low-wage workers, whose wages could not fall by the full cost of...a substantial pay-or-play fee if they were close to the minimum wage," also found that the cost of such new mandates and taxes would be passed on to workers in the form of lower wages.  In other words, a pay-or-play tax on jobs would drain the paychecks of low-income workers most in need of additional purchasing power.

Medicaid Not "Real Insurance."  H.R. 3962 includes significant expansions of Medicaid, which pays physicians 40 percent below private insurance plans, and in most States, suffers from reimbursement delays and other bureaucratic hassles.  These systemic problems in Medicaid keep provider participation low-creating a situation where many beneficiaries have an insurance card but no access to care.  As one Medicaid beneficiary noted, "You feel so helpless thinking, something's wrong with this child and I can't even get her into a doctor....When we had real insurance, we would call and come in at the drop of a hat."  During the markup of economic "stimulus" legislation, Energy and Commerce Committee Chairman Waxman conceded significant problems with the Medicaid program, admitting that "it is highly unlikely that you are going to find any millionaires who would like to go on Medicaid."  Some may therefore question why a plan unattractive to wealthy individuals constitutes a quality form of health care for millions of less affluent Americans who may have no alternative option. 

No Choice of Plans.  H.R. 3962 forces individuals with incomes under 150 percent of the federal poverty level ($33,075 for a family of four) onto government-run Medicaid, rather than giving these individuals a choice of private plans on the new health insurance Exchange.  Some may question the logic behind provisions that allow a family of four with $34,000 in annual income a choice of health insurance options, while denying the same choice to a family with $1,000 less in income.

Will States Provide Medicaid Coverage?  Section 1703 of H.R. 3962 prohibits States from reforming their Medicaid programs at any point in the future.  And Section 1701 requires States to pay nearly 10 percent of the proposed Medicaid expansion beginning in 2015-an additional $34 billion in mandated costs over the next decade, according to the Congressional Budget Office.  Governors in both parties have already voiced significant concerns about what Tennessee Democrat Gov. Phil Bredesen termed "the mother of all unfunded mandates" being imposed upon States.   As a result of the added restrictions in Democrats' proposals, the head of Washington State's Medicaid program believes that States facing severe financial distress may say, "‘I have to get out of the Medicaid program altogether'"-a decision which would jeopardize coverage for millions of low-income Americans.