Weekly Column of U.S. Senator Lamar Alexander (R-Tenn.) - “Could the Kennedy Health Plan Lead to a 10 Percent Tennessee Income Tax?”

Posted on June 21, 2009

Every senator who votes to increase Medicaid eligibility to 150 percent of the federal poverty level should be sentenced to serve eight years as governor in his or her home state. Senators are going to have the opportunity to cast just such a vote, because this week we’ve been debating a new health care proposal by Senator Kennedy that would do exactly that. During their eight years as governor, these senators would have the chance to see how hard it is to manage Medicaid and find a way to pay for that sort of proposal, perhaps by raising taxes. Medicaid is a terrible base upon which to build an improved health care system. It is filled with federal court consent decrees (a type of court order resulting from litigation) that are sometimes 25 years old and take away from the governor’s and the legislature’s authority to make decisions. It is filled with inefficiency. It is filled with delays. And finally, it is filled with an intolerable waste of taxpayer money through fraud documented by the General Accountability Office. As much as 10 percent of the entire program—that’s $32 billion a year according to the General Accountability Office—is lost to fraud. This is what the Medicaid program is really like. Increasing coverage by this much would require much higher state taxes at a time when most every state is making a massive cut in services, and a few states are nearly bankrupt. For example, in Tennessee, if the Kennedy bill were to pass, which would increase Medicaid expansion by 150 percent and increase reimbursement rates to 110 percent of Medicare, it would require, based on our estimates, a new state income tax of about 10 percent to pay for the increased costs just for our state, as well as perhaps adding another half a trillion dollars or so to the federal debt. Finally, if we were to base new coverage for the 58 million people now in Medicaid, and others who need insurance, upon this government-run Medicaid program, we would find that a large number of the uninsured and underinsured would have a hard time finding a doctor. Today, 40 percent of doctors already refuse to provide full service to Medicaid patients because of the low reimbursement rates, and if we simply add more, these people will have an even harder time getting served. There is a better idea. Instead of expanding a failing government health care program which traps 58 million of our poorest citizens in a government-run program that provides substandard care, the better way to extend medical care to those low-income Americans is to give them government tax credits—or government subsidies, or vouchers—they can use to purchase the private health insurance of their choice. That sort of option for health care reform is before the Senate, if it could only be considered. It has been offered in one form by Senator Coburn and Senator Burr. It has been offered in another by Senator Gregg of New Hampshire. It has been offered in a bipartisan way by Senator Wyden and Senator Bennett who have offered a proposal that would basically provide aid to the people who need help, let them buy their insurance, and according to the same Congressional Budget Office that said the Kennedy proposal costs at least one trillion more dollars, the CBO has said that Bennett-Wyden would cost zero more. During the last six months, the four words we have heard most in Washington are "more debt" and "Washington takeover," and all four words apply to the health care debate. We have seen a Washington takeover of banks, of insurance companies, of student loans, of car companies—and now, perhaps, of health care. The president insists on a government-run insurance option as part of a health care reform plan which would inevitably lead to a Washington-run health plan. Why would it do that? Well, putting a government-run and subsidized plan in competition with our private health insurance plans would be like putting an elephant in a room with some mice and saying: “OK, fellas: compete!” I think we know what would happen. The elephant would squash the competition and the elephant would be your only remaining choice. I hope I can find a way to offer an amendment that would require any senator who votes for a Medicaid expansion to 150 percent of the federal poverty level to be sentenced to go home and serve for eight years as governor of his or her state so they can find out what it is like to manage such a program—and what it’s like to raise taxes to pay for it.