Tax Equivalent

With Connecticut Sen. Joseph Lieberman apparently mollified by the elimination of the so-called "public-option" and a proposed expansion of Medicare to people aged 55 and over who don't get health insurance through employers, the skids seem to be greased for passage of the Senate version of health insurance modification. Sen. Ben Nelson, a Democrat from Nebraska, may hold out due to his concern that taxpayers may be forced to pay for abortions. If he is satisfied, abortion proponents will be unhappy. So it's not quite a done deal.

The House and Senate versions have substantially different ways to pay for the legislation, with the House unlikely to accept a big tax on "Cadillac plans" that would affect union members. And much in the Senate bill has not even been decided yet, let alone made public.

Unfortunately, the extended tussle over a public option and Medicare expansion was always something of a sideshow that has served to divert attention from the damaging effects that are inevitable in the 2,000-plus pages of mandates and micromanagement contained in the rest of the bills.

The most pernicious aspect of both House and Senate proposals is the individual mandate, which would make it compulsory for every American to purchase health insurance deemed satisfactory by the government or face fines and other penalties. This provision may well be unconstitutional and it could be challenged on constitutional grounds. If it passes such a test its effects will be perverse.

A mandate to buy health insurance is the equivalent of a hidden tax — when the Clinton proposal was pending the Congressional Budget Office counted the cost of mandates as taxes and they amounted to 60 percent of the total.

Current versions have been manipulated to avoid triggering calculation of those costs by the CBO, but a conservative estimate would put them at about $1.5 trillion over 10 years, compared to about $1 trillion in overt increases in government spending.

An individual mandate allows the government to control what kind of insurance you can buy, how much you will pay, how insurers pay doctors, how doctors work, how doctors practice medicine, and ultimately what kind of medical care you receive. It is a giant step toward complete government control over medical care.

Ironically, given President Barack Obama's support from younger voters, younger Americans would be especially penalized, with their premiums subsidizing lower premiums for older Americans. Combined with a mandate that insurance companies ignore pre-existing conditions, it could have the perverse effect of reducing the number of Americans with health insurance. If younger people choose to pay a fine rather than get health insurance until they contract a condition requiring expensive care, the insurance pool would include more sicker people and premiums would have to rise.

One way the bills seek to expand health insurance is by expanding eligibility for Medicaid, the state-run program for lower-income people. This would require state governments to spend at least $25 billion more over the next 10 years. Those costs are not included in CBO estimates.

Both House and Senate versions include tax credits to subsidize those who can't afford insurance, but only if they purchase insurance through government-run exchanges each state would be required to set up.

In short, passage of either bill would increase health care costs and government control exponentially and still not achieve universal coverage. Not a good deal.

REPRINTED FROM THE NEW BERN SUN JOURNAL.

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