Health Care Reform - Passage Recap

I want to begin by thanking everyone from the 5th District, as well as the rest of the state of Louisiana, for taking the time to contact our office for nearly a year to discuss their thoughts on the current health reform issue.  We received an overwhelming amount of phone calls, faxes, emails, and hard mail that clearly stated you were not in support of this overhaul of the health care system. 

In the U.S. House of Representatives, we have seen multiple versions of health care legislation, including the most recent package which was voted on and passed on Sunday, March 21, 2010.  The disastrous health care package consisted of two bills:  the Senate-passed H.R. 3590, The Patient Protection and Affordable Health Care Act, which passed by a vote of 219-212, and was signed into law on March 23, and the reconciliation package H.R. 4872, The Health Care & Education Affordability Reconciliation Act of 2010, which passed by a vote of 220-211, and is currently being debated in the Senate. 

The outpour of opposition from the American public apparently did not resonate with the congressional majority. Their decision to vote and pass this massive overhaul of our health care system was rammed down our country’s throat in order to get it quickly across the finish line.  Unfortunately, this is no longer about seeing positive changes to our health care system, but just a political agenda to get something passed – no matter what the cost.

If you are interested in learning more about the health care package, please select the sections telow that interest you.

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Reasons I did not support bill:
I want to discuss with you why I again did not support the health reform package.  I understand that bills are not always perfect, but this legislation is a disaster waiting to happen. 

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•    It Undermines the Patient-Physician Relationship
This legislation undermines the patient-physician relationship and empowers the federal government with even greater authority through new physician, employer and benefit mandates.  The majority of this country will be forced to rely on the federal government for everything from mortgages, student loans, health care, and retirement benefits.  For people who do not purchase insurance, there are penalties.  Individuals who earn enough to pay taxes would pay either $325 or 2 percent of income, whichever is higher in 2015.  Fines will continue to increase in years after.  Employers who cannot afford to pay their employees health care will face $52 billion in taxes alone through the employer mandate.

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•    Lack of Protection for TRICARE or Military Health Plans
This package also does not protect TRICARE or military health plans from a Washington bureaucrat deciding that service members and their families would have to buy some other health coverage or pay a penalty.  The Senate-passed health care bill omitted protections for military health plans that were included in H.R. 3962.  Specifically, the Senate language does not appear to give the Department of Veterans’ Affairs (VA) health care system specific protection from interference by other government agencies administering the various authorities contained in the massive bill, as it pertains to “minimum essential coverage.” 

The final bill would leave it up to the Department of the Treasury to determine whether TRICARE meets the minimum standards under the Democrats’ individual health insurance mandate.  If that bureaucrat decides against TRICARE, service members and their families would have to buy some other health coverage or pay a penalty.

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•    Expansion of an Already Unsustainable Medicaid Program
Proponents of this health reform package are misleading the American public into believing that you can raise baselines and reduce spending at the same time. The unsustainable nature of the bill from a financial standpoint was another reason I refused to support this bill.  You cannot expect to expand coverage to millions of individuals and curb costs.  The Medicaid program already pays doctors and hospitals at levels well below those of Medicare and private insurance - and most of the time below actual costs. Many doctors, therefore, do not accept Medicaid patients, and cuts may further discourage participation in the program.  The most devastating cuts to states’ federal Medicaid match have been deferred because of relief from the stimulus package, but that deferment expires at the end of December.  Ultimately, this bill expands an already broken and unsustainable Medicaid program from 100 percent Federal Poverty Level (FPL) to 133 percent FPL, despite an estimated $80 billion in taxpayer dollars lost every year due both Medicare and Medicaid fraud.  It will also devastate the thinly stretched state budgets with a $20 billion unfunded mandate to expand their Medicaid population and cut federal Disproportionate Share (DSH) dollars, which the state of Louisiana heavily relies on to cover the indigent population through the Charity Hospital System.

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•    Burdens to Our Physician Workforce
The bill contains new bureaucratic boards that cede the definition of quality and hands more power over to the federal government through the comparative effectiveness research board, the Patient Centered Outcomes Research Institute, as well as the unprecedented authority to change the Medicare program through the new Independent Payment Advisory Board (IPAB) and the new Center for Medicare & Medicaid Innovation.  The IPAB would be able to make arbitrary cuts to Medicare providers and make recommendations to non-federal health programs that limit access to care for seniors.

Doctors and medical personnel that have met with me in the past few months have expressed concern for the decrease in the physician workforce side effect of health reform.  The state of Louisiana already has low physician workforce levels, and this would only further burden our state.  They have stated that there is no incentive to spending that much time, effort, and financial hardship only to enter a field where the government dictates medical care.  Presently, 89 percent of Louisiana parishes are designated as a Health Professional Shortage Area (HPSA) in primary care, and over 85 percent as a HPSA in dentistry.  We currently have an aging workforce and an aging population, already increasing demand as is for physician services.  The percentage of Louisiana physicians over 60 years of age is greater than those who are under 40 years of age (24 percent to 19 percent respectively, with 57 percent of the workforce ages 40-59 years).

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•    Increases taxes
This bill includes an increase of $569.2 billion in new taxes over 10 years.  In the midst of 9.7 percent unemployment in this country and 8.2 percent in Louisiana, forcing job-killing taxes in a time when we can least afford to lose jobs will devastate small businesses, job creators, investors and middle class families.

It also contains at least a dozen direct and indirect tax increases that would break President Obama’s pledge not to raise taxes on those making less than $200,000 for singles and $250,000 for couples.  These include: (1) a “Cadillac tax” on high-cost plans; (2) an individual mandate tax on Americans who do not purchase government-approved health insurance; (3) an increase in the 7.5 percent AGI floor for medical expense deductions to 10 percent, (4) limits on Flexible Spending Accounts (FSAs) in cafeteria plans; (5) increased penalties for nonqualified Health Savings Accounts (HSAs) distributions; (6) other restrictions on HSAs, Health Reimbursement Accounts, and FSAs; (7) a tax on tanning services; (8) an employer mandate tax; (9) a sales tax on medical devices; (10) a tax on health insurance premiums; (11) a tax on prescription drugs; and (12) a tax on insured and self-insured health plans.

The Cadillac tax in the bill would not keep pace with medical inflation after it comes into effect in 2018, meaning a larger and larger tax hit over time.  Beginning in 2020, this tax would be indexed by only the consumer price index (CPI).  Given that health insurance premiums will likely increase faster than the CPI, the Cadillac tax would hit more and more plans each year and take a bigger bite from those already covered

Current law provides important tax relief to Americans who suffer catastrophic out-of-pocket medical expenses, permitting a deduction for costs above 7.5 percent of income.  This bill would raise that threshold to 10 percent of income in 2012 (2016 for seniors and the disabled).  This is a particularly hard hit on those with the highest medical costs who can least afford to pay more taxes.  And, according to the non-partisan Joint Committee on Taxation (JCT), more than 95 percent of the revenue generated from this tax increase would come from taxpayers earning less than $200,000.

The 3.8 percent Medicare tax would, for the very first time, apply to capital gains, dividends, interest, rents, royalties, and other investment income of singles earning over $200,000 and couples earning over $250,000.  Currently, capital gains and dividends are taxed at a top rate of 15 percent, but those rates are previously scheduled to rise in 2011 to 20 percent and 39.6 percent, respectively.  When the expansion of the Medicare tax is coupled with the already scheduled rate increase, capital gains rates on these types of investment income, long-term capital gains rates would rise by almost 60 percent next year – from percent to 23.8 percent – and the top tax rate on dividends would nearly triple – from 15 percent to 43.4 percent.

In non-health related taxes, the reconciliation bill includes a total of $49.7 billion in anticipated revenues.  To name a few, these include prohibiting the so-called “black liquor,” a wood pulp byproduct that can be used as an alternative bio-fuel, from becoming eligible to receive a tax credit for cellulosic bio-fuel production that was established in the 2008 farm bill; and eliminating the exclusion employer plans receive in connection with offering qualified retiree prescription drug coverage under the Part D retiree drug subsidy program.  Under current law, these plans are not subject to the corporate income tax.  I am concerned that this will lead to employers dropping drug benefits for retirees. 

The bill vastly expands the responsibilities of the Internal Revenue Service (IRS) and would strengthen this entity’s heavy hand in dealing with ordinary taxpayers who play by the rules.  Because of this, the IRS may have to hire up to 16,500 additional auditors, agents, and other employees just to enforce all the new taxes and penalties.  The bill would empower the IRS to: (1) verify that Americans have “acceptable” health care coverage through the individual mandate; (2) fine Americans up to $2,085 or 2 percent of income (whichever is greater) for the failure to purchase “minimum essential coverage”; (3) confiscate tax refunds; and (4) increase audits.  So what I take from this is that we will expand new government jobs, but decrease the private sector.

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•    Cost to Taxpayers
The Congressional Budget Office (CBO) released a “preliminary” estimate of the Democrats’ health care legislation totaling $938 billion. However, the CBO document cautioned that its estimate was not yet complete, and included assumptions such as future tax increases and cuts to federal programs would be voted on and approved in future years – an unlikely political scenario.

The CBO also did not count discretionary spending, saying, “CBO has not completed an estimate of the potential impact of the legislation on discretionary spending, which would be subject to future appropriation action.” The House and Senate Budget Committees and the House Appropriations Committee estimate that this discretionary funding will exceed $100 billion, and could potentially reach into the hundreds of billions of dollars.

When including the cost to states of the mandated Medicaid expansion ($20 billion), as well as authorized discretionary spending for grants, public programs, changes and funding for a variety of agencies that would be responsible for implementing the Senate bill (up to $114 billion according to the Senate Budget Committee), the total cost of the bill is more like $1.33 trillion.  Finally, the bill costs $2.47 trillion counting just the first ten years after implementation.

This health care legislation will increase premiums by 10-13 percent.  As JCT and CBO have both shown, imposing new taxes on insurance policies, health care products, and various new insurance regulations will drive costs up for patients of all ages with higher premiums.

The Office of the Actuary (OACT) at CMS predicts overall national health insurance expenditures under the Senate-passed H.R. 3590 will jump by 0.6 percent or $222 billion due to various regulations.  CBO also anticipates that “under the legislation, federal outlays for health care would increase during the 2010-2019 period, as would the federal budgetary commitment to health care”. CBO estimates the federal commitment would increase by about $210 billion.  A recent article from the Wall Street Journal stated that “Public funds accounted for 47 percent of the $2.34 trillion of national health spending in 2008, the last year for which figures are available. Centers for Medicare and Medicaid Services (CMS) estimates that the proportion will rise to 50.4 percent by 2011. Last year, the federal actuaries had predicted the 50 percent mark wouldn't be reached until around 2016.  Federal spending in the health care sector will only increase even more with this legislation, and I refuse to support that.  The majority has already allowed a $1.9 trillion or 15.3 percent debt increase, raising the statutory limit to $14.294 trillion.

Despite the administration’s claim that this additional tax revenue would be used to make Medicare’s Hospital Insurance trust fund more sustainable, such money would in fact go to the expansion and creation of new entitlement programs.

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•    Cuts to the Medicare Program
The bill also includes $523.5 billion in cuts to Medicare, cutting benefits and raising premiums on seniors.  These cuts are not used to reduce the deficit, but instead to create new entitlement programs. These cuts specifically include $202.3 billion in cuts to seniors’ Medicare Advantage plans.  As a result, Medicare Advantage plans will drop out of the program, limiting seniors’ choices and causing many to lose their current health care coverage.  Countless individuals have contacted me with concerns regarding funding cuts to the Medicare Advantage program.  Medicare Advantage has been successful in providing seniors with choice, selection and value. This is especially true for residents of rural America, where seniors have previously not had sufficient private alternatives.  Currently, over 600,000 seniors are Medicare beneficiaries in Louisiana, while over 10,694 seniors in the 5th District are enrolled in the Medicare Advantage program.

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•    Lack of Medical Liability Reform
The bill merely requires the Comptroller General of the United States to conduct a study of whether the development, recognition, or implementation of any guideline in the bill would result in the establishment of a new cause of action or claim.  A study does nothing to prevent medical liability lawsuits.

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•    Access for Illegal Immigrants
Another concern of mine is that illegal immigrants having access to taxpayer-funded benefits.  This bill fails to adequately address citizenship verification for individuals applying for low-income affordability subsidies or enrolling in Medicaid/State Children’s Health Insurance Program (SCHIP) or high risk pools.

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•    Pro-Life Concerns
The reconciliation bill does not prohibit federal funds from flowing to plans that cover elective abortion.  The president cut a last minute deal with House Democrats with an executive order that would clarify but not change the underlying legislation.  The agreement falls short of the Stupak-Pitts language included in H.R. 3962, and an executive order doesn't carry the force of law, but represents the president's directive to agencies he controls.  This is a huge drawback for many in the majority party as well; so in July, I introduced H.Con.Res. 169, which urges Members of Congress to eliminate taxpayer-funded abortions from any proposed health care reform package.  It currently has 45 cosponsors.

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•    Constitutionality Issues
Numerous people have contacted me with questions and serious concerns about the constitutionality of mandated health coverage.  The U.S. Constitution and the principle of limited government are tested with the requirement that American’s must purchase “acceptable” health care coverage or face a tax of 2.5 percent of modified adjusted gross income.  The government deems health care coverage as they see “acceptable.” 

In light of passage, Louisiana and many other states have affirmed in press reports they will file a lawsuit to protect the rights and the interests of American citizens, as it “clearly violates the U.S. Constitution and infringes on each state’s sovereignty.” 

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•    Student Loan Shift from FFEL to Direct Loans
Last September, the House passed stand-alone legislation, H.R. 3221, the Student Aid and Fiscal Responsibility Act of 2009.  I did not support H.R. 3221, and I did not support this education legislation in the midst of a health care bill.  This provision was included in the reconciliation package, and ultimately constitutes a massive, permanent government takeover of the private student loan industry, which will terminate the Federal Family Education Loan (FFEL) program, expand the Federal Direct Loan program, and increase spending on other post-secondary education programs. This marks a dramatic shift in the federal government's approach to student lending and result in a consolidation of federal power over education financing.

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