Posted on March 29, 2010
KNOXVILLE — Despite the positives and negatives we’ve heard about the new health care reform law, the reality is that we don’t yet have much of a clue about its ultimate costs to individuals, businesses and state governments.
In all probability, neither do many members of Congress.
Last year Rep. John Conyers, a Michigan Democrat, was asked about calls for members of Congress to read the health care legislation before casting their votes.
At a National Press Club luncheon, Conyers said, “I love these members, they get up and say, ‘Read the bill.’ What good is reading the bill if it’s a thousand pages and you don’t have two days and two lawyers to find out what it means after you read the bill?” That, from the chairman of the House Judiciary Committee.
Incidentally, the bill turned out to be more than 2,400 pages. John Conyers and many of his colleagues probably gave those additional 1,400 pages a pass as well.
The Congressional Budget Office estimated the cost of the reform at approaching $1 trillion over 10 years. Let’s accept that as a minimum. The CBO had also predicted that it would be 2016 before Social Security would pay out more in benefits than it collected in revenue. However, it has already begun, so the CBO was off by six years. Sometimes you hit, sometimes you miss. But we’re talking about very big dollar figures for which Americans are on the hook.
Gov. Phil Bredesen apparently understands the health care legislation to the extent that he referred to it as “the mother of all unfunded mandates.” Unfunded mandates enable elected officials to say they did something good while passing the payment responsibility to others.
“We can’t print money,” Bredesen said in the Nashville City Paper last September. “We can’t borrow money. A lot of staffers in Congress really don’t understand this idea of a balanced budget.”
Sen. Bob Corker says Gov. Bredesen told him that the health care legislation passed by Congress and signed into law by President Barack Obama will add $1.1 billion in Medicaid costs over five years to Tennessee’s already ravaged budget.
Sen. Lamar Alexander said this after the health care vote: “It is an historic mistake to expand a health care delivery system that everyone knows we can’t afford instead of reducing its cost so more Americans can afford to buy health insurance.”
Bredesen is a Democrat. Corker and Alexander are Republicans. This is bipartisan agreement that the health care bill is expensive for Tennesseans.
Tennessee Finance Commissioner Dave Goetz has said one effect of the recession is that state government revenues will not reach even their 2007 levels for years to come. Meanwhile, Tennessee is dealing with billion-dollar budget holes. The alternatives are to raise revenue, cut services, or both. Now on top of that grim scenario come federal health care mandates and 200,000 new people on Tennessee’s TennCare rolls.
The mandates don’t stop at state governments. They include companies, which eventually affects customers, employees and retirees.
On March 26, Business Week reported: “AT&T Inc. will book $1 billion in first-quarter costs related to the health-care law signed this week by President Barack Obama, the most of any U.S. company so far.
“A change in the tax treatment of Medicare subsidies triggered the non-cash expense, and the company will consider changes to the benefits it offers current and retired workers, Dallas-based AT&T said today in a regulatory filing.”
A March 26 CNN Politics story headlined “Health care bill brings big costs for big companies,” said that Caterpillar, John Deere and other companies are warning shareholders that their profits are going to “take a hit.”
According to the story, Caterpillar sales fell 37 percent last year and the company laid off 19,000 workers worldwide. Company spokesman Jim Dugan is quoted thus: “Having an additional cost like this is not great timing.”
In a 2,400-page bill there are bound to be some good things, but there is a price. Among mandates on insurance companies is the popular requirement that these companies provide coverage of pre-existing conditions. As approving as one might be of that provision it will be expensive. Who pays, and how much?
To fund reform, as referenced above, costs are being passed to states and increased to companies. Taxes are also being raised on the “rich,” individuals making more than $200,000 and couples making more than $250,000.
It begs the question: if these taxes increases are dedicated solely to health care, where and how will the government find money to deal with the monstrous annual federal deficits and even more monstrous national debt?
America is more than $12 trillion in debt. Our annual deficits are in the $1.5 trillion range. Federal Reserve Chairman Ben Bernanke is warning that something must be done about deficit spending, which is like suggesting that the seawall be heightened as you’re swept away in a tsunami.
If deficit reduction means more taxes on companies and individuals it would be good to consider the words of Winston Churchill: “Trying to bring about prosperity by laying on taxes is like standing in a bucket and trying to lift it by the handle.”
Advocates for health care reform say it will eventually reduce costs. That would be great. But they’re promises only. Cost reduction didn’t occur in Massachusetts, which in 2006 passed the nation’s first universal health insurance law. The law resulted in more people becoming insured, but during the last three years the Bay State’s health cost graph resembles the flight path of a jet plane starting to go ballistic.
A March 15, 2009 New York Times story headlined “Massachusetts Faces Costs of Big Health Care Plan” included this: “The day of reckoning has arrived. Threatened first by rapid early enrollment in its new subsidized insurance program and now by a withering economy, the state’s pioneering overhaul has entered a second, more challenging phase.”
The new federal health reform bill is sending billions of taxpayer dollars to Massachusetts to help it out of its fix. That’ll keep the boat afloat for a while. Then what?
If the new health reform law takes the country the way of Massachusetts, who will bail out the U.S.?
Everyone wants lower health care costs, health care access, lower insurance rates, more care for the needy, and better benefits for the insured. At the same time, for every political action there is an equal and opposite cost reaction.
When it comes to meeting the price of national health care reform – and the costs of our deficit and everything else the government has committed taxpayers to fund - we really don’t seem to have much of a clue how it will all add up. But we’re going to find out.
George Korda is political analyst for WATE-TV. He hosts “State Your Case” Sunday afternoons from noon to 3 p.m. on FM 100, WNOX and appears on the “Hallerin Hilton.