Senate bill would cut Medicare and expand taxes, debt

A year ago, I started working on healthcare reform as part of an effort in the Senate to come up with a bipartisan solution to the problems facing America’s healthcare system. Big changes in social policy historically have been made with broad-based political support, from civil rights laws to the creation of Social Security, Medicare and Medicaid. The healthcare system makes up one-sixth of America’s economy and touches every household, so healthcare reform also should have widespread backing.

Starting out, the goals for comprehensive reform were to reduce the rising costs of healthcare, which are straining the budgets of families and employers, and to make insurance coverage more accessible and affordable. Unbelievably, the legislation passed on Christmas Eve fails to reduce rising healthcare costs (according to the Congressional Budget Office) and would result in higher premiums and higher taxes for middle-class families.

In addition, what’s called the Patient Protection and Affordable Care Act would cut nearly a half-trillion dollars from Medicare to spend on a new entitlement program, despite Medicare’s own pending insolvency. Medicare’s nonpartisan chief actuary said the cuts would jeopardize seniors’ access to care. Medicare also has a major problem with physician payments that will cost more than $200 billion to fix, but this bill ignores the issue. The new entitlement program created by the healthcare bill comes at a time when the federal debt has increased by $1.4 trillion since last January and now exceeds $12 trillion for the first time in history. The healthcare legislation, which leaders claim is deficit-neutral, in fact would cost $2.5 trillion over 10 years. This real cost is masked by a budgetary maneuver that uses 10 years of revenue to pay for five or six years of programs because the healthcare changes made by the bills would not take effect until 2014.

The legislation also would add 15 million people to the Medicaid program, at an expense to federal taxpayers of $374 billion, and additional costs to states. Already, the independent Government Accountability Office predicts that state spending on Medicaid will grow faster than state revenues for at least the next 10 years. Cash-strapped states likely will be forced to raise taxes to pay for the additional $25 billion they will need for the proposed Medicaid expansion.

The healthcare reform legislation was passed in the House and Senate with party-line votes after the bipartisan effort that I was part of was pushed to the side last September by an administration that seemed to want a bill at any cost, including the jettisoning of responsible, sustainable policy. At this point, it seems the White House is in a hurry to get the bill passed before the public can find out what’s in it, even while public opinion is strongly opposed. It’s regrettable, and if the House and Senate agree to a final bill and the president signs it into law, Americans will be stuck with a staggering tax burden for generations to come, along with increasing healthcare premiums and a continuation of higher healthcare costs.

As people nationwide struggle to find jobs, and employers and entrepreneurs work to find new opportunities, the half- trillion dollars in new fees and taxes in the reform legislation will hurt small business and destroy job creation. And, both the nonpartisan Joint Committee on Taxation and the Congressional Budget Office have confirmed that new taxes and fees will be passed through to consumers in the form of higher health insurance premiums. These taxes and fees will start increasing premiums four years before most of the reforms take effect in 2014.

This bill will hurt the economic recovery effort, and after a year of government bailouts for Wall Street and Detroit, a stimulus bill that left us with the highest unemployment in 26 years, and the Federal Reserve shoveling money out the door without any accountability, it’s the straw that broke the camel’s back.

Instead of mortgaging the future of our children and grandchildren, Congress should stick to the basics and pass commonsense medical malpractice reform to stop wasting so much money on defensive medicine, end pre-existing condition exclusions and waiting periods, empower consumers to shop around for healthcare and decrease costs with competition, just like with other services we buy. Congress should make market reforms that help small businesses and the self-employed access health insurance. These issues can be addressed without upending the entire healthcare system and making things worse, not better.

Grassley is the ranking member on the Senate Finance Committee.