Today on Politico.com's Arena discussion, the following political comments were made regarding healthcare, and the Congressional Budget Office's announcement that the financing for the bill in its current state, is a sham:
The Chairman of the CBO, who made the statement, was appointed by the Democratic leadership. That means one of their own are telling them the Healthcare Reform Bill is being built on expensive, muddy ground. Here are a few political luminaries who chimed in against the passage of the nationalization of medicine:
Cesar Conda, Republican strategist, former Romney and Cheney advisor:During yesterday's Arena debate over the House Democrats health reform bill, Maggie Mahar suggested that I had not "taken the time to read the bill carefully."
I did read the bill and here are the facts about the bill's proposed tax increases: Today, the top marginal tax rate is currently 35 percent. In 2011, the Democrats would allow the Bush tax cuts to expire, thus producing a top tax rate of 39.6 percent. The bill's 5.4% surtax on married couples making more than $1 million would raise the top marginal tax rate to more than 45% in 2011. The bill would impose a surtax of 1.5% on couples with incomes between $500,000 and $1 million, and 1 percent on incomes over $350,000. These tax rate increases would hit our most productive citizens, especially small businesses. Combining Federal, state and local taxes, the top earners in 38 states would be subject to a maximum marginal tax rate of over 50 percent.
The bill increases the maximum capital gains and dividend tax to historically high levels. Because the Democrats refuse to extend the Bush tax cuts, the current capital gains tax and dividend tax of 15 percent would increase to 20 percent and 39.6 percent in 2011 respectively. On capital gains, the combination of the 5.4 percent surtax on adjusted gross income plus that amount multiplied by assumed deductions and exemptions (about 20 percent of AGI), produces a top capital gains tax of 26.5 percent. The addition of the surtax produces a maximum dividend tax rate of 46 percent in 2011.
Mahar argues that this tax increase "is not going to stymie capital formation." Again, here are the facts: The combination of the corporate tax, the capital gains tax, and the dividend tax produces an all-in integrated tax rate on corporate stock of 44.8 percent today, according to Ryan Ellis of Americans for Tax Reform. Under the Democrats tax increase plans, the integrated tax rate on corporate stock would increase to 54.8 percent, a whopping 10 percentage points in 2011, which will most certainly have a negative impact on capital formation and economic growth.
Furthermore, the Federal government will not raise anywhere near the amount of revenue it expects from this tax plan because high-income taxpayers will reduce the amount of income they earn in order to avoid the punitive marginal tax rates. The result will be a prolonged recession, anemic economic growth, and a costly multi-trillion dollar unfunded government healthcare program.
Scott Gottlieb, Physician, Resident Fellow AEI:
Comments this week by Congressional Budget Office Director Douglas Elmendorf -- that the health care overhauls released to date would increase, not reduce, the government's long-term health costs -- reveal a basic if not ultimately fatal flaw of President Obama's current healthcare plan.
In short, it does little to nothing to change the wasteful way government agencies deliver and pay for healthcare. For all the talk about Medicare's so-called efficiency, most in Washington (President Obama included) acknowledge that the outdated way Medicare pays providers leads to a lot of wasteful over-utilization. There's near unanimous agreement on Capitol Hill that Medicare needs to change its formula for purchasing services to align reimbursement with improved outcomes. It needs to pay for quality rather than just paying for the volume of services that doctors deliver.
Yet the current legislative proposals out of the House and the Senate HELP Committee pay lip service to these concepts. There's reason for that. Medicare doesn't know how to get these changes done. Where the government program has piloted some promising ideas (mostly by copying things underway in the private sector) to align payment with performance and better coordinate care, Medicare has struggled to consolidate enough internal expertise as well as political capital to make these efforts more enduring and pervasive.
The chairman of the Senate Finance Committee, Democrat Max Baucus of Montana, has been honest about this problem. He has put forward some his own ideas for directly addressing the long-term cost problem. But he has also said that the White House is making the task difficult with opposition to one cost-cutting approach Elmendorf cited (and most agree) would ratchet down cost growth across the public and private sector - and that is limiting or even ending the tax exclusion for employer-provided health benefits.
What has the White House offered instead? They have dressed up the current legislative proposals with ideas for a new "comparative effectiveness" agency, better information technology, and a tax on junk food. These ideas may have individual merit. But when it comes to long-term and structural changes that will lower growth in healthcare spending, there's little reason to believe that these proposals are more than eye candy. They won't fundamentally change the expensive way healthcare is delivered and reimbursed. There is a reason why the CBO doesn't ascribe meaningful cost savings to these sorts of ideas.
So where does that leave us? As the 800-pound gorilla in the marketplace, our healthcare problems exist not in spite of the inefficient and often decerebrate way that Medicare buys healthcare services, but precisely because of it. Distilled down, President Obama's plan is to expand Medicare's reach still further by applying the same model to a "public" government run insurance option that will slowly entrap the presently privately insured, under 65 crowd. How can that make sense?
There could be only one logic behind this kind of plan. The Machiavellian idea that once the government controls most of the market, it will be able to control costs the only way it knows how -- by directly regulating prices and access. That is how Medicaid manages to deliver a cheap product, paying providers literally pennies on the dollar of regular health plans. For Medicaid, the end result has been a third rate insurance product that unfairly relegates many of the poor to some of the worst providers and delivery settings in America. It's becoming a national shame in some parts of the country.
In the long run, many of the critics of President Obama's healthcare ambitions fear that this is what's in store for everyone as the government expands its reach over healthcare. Federal programs only know one formula for controlling their costs. Comments by the CBO director this week bravely expose some of these uncomfortable truths.
David Boaz, Executive VP, Cato Institute:
President Obama and his allies have been trying to convince Americans that their magical health care reform would deliver more health care to more people at lower cost, with no restrictions on the doctors and services people can use.
It was obvious that the claim that such an expansion would result in lower costs was hogwash. And it's important that the nonpartisan CBO, headed by a Democratic appointee, has confirmed that that central claim is hogwash. Or technically, that "We do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount. On the contrary, the legislation significantly expands the federal responsibility for health-care costs."
Will the slim but solid Democratic majority stick together to pass health care in defiance of this un-rosy scenario? It's happened before. But with polls showing voters becoming more concerned about spending and deficits, and Americans rightly skeptical of something-for-nothing promises, it's becoming harder to sell huge spending increases by calling them "hope and change."
Donald Johnson (guest), Blogger, businessword.com, CO:
They won't impose deductibles on Medicare enrollees, which would immediately contain Medicare expenditures. And they won't remove the states' 1,000+ benefit mandates on private insurers because their campaign contributors won't let them. They won't give equal tax benefits on catastrophic insurance only to both employers and individuals who buy insurance, because they think MedPac and Dartmouth can make better health insurance buying decisions for consumers than the consumers can.
The real problem is that the Democrats are stuck with old time, discredited thinking about how markets, politics and central planning work. Get rid of the old guys like Kennedy, Waxman and Rangel and maybe something "progressive" will be done about the health insurance and health care markets.