The Healthcare Reform Fraud

On October 13th  the Senate Finance Committee voted on a healthcare reform bill written by Senator Max Baucus( D. Mont). Senator Baucus touted a Congressional Budget Office report that allegedly bolstered  his claim that the bill wouldn’t add a dime to our federal deficit. Was that the whole truth? Hardly.

 

What Baucus did was use a selective scenario of numbers to ensure that the Congressional Budget Office provided the financial picture of the cost of the program that he needed. Baucus claimed the cost of the healthcare reform bill would be $829 billion over the first ten years, and that the bill included sufficient spending cuts and tax increases to avoid adding to our already enormous federal deficit.  The CBO, in its usual thorough approach, also calculated what the Baucus bill would cost in the second 10 years.

 

The CBO projected that in the second ten years the cost of the bill would triple to $2.8 trillion and that the fines for failure to have insurance, associated taxes and levies would triple - to an estimated $1.8 trillion. The planned cuts to Medicare and related federal health programs would quadruple- to $1.9 trillion. The bottom line? In the first twenty  years the Baucus bill would cost a staggering $3.6 trillion and would raise the taxes Americans pay by an additional $2.3 trillion.

How did Baucus pull out of the hat his projected cost of $891 billion with no addition to the federal deficit in the first ten years? Simple governmental sleight of hand. The first ten years of the bill includes years that the services provided by the bill are not in full effect. Baucus had the CBO calculate the cost from 2010 until 2019. The taxes you will pay, or the ‘healthcare premium’, would begin in 2010, but the program won’t actually be fully operational until 2015. Simply put, you’ll pay ten years of ‘premium’ with only five years of access to a fully operational program. The bill will cost the government zero to operate in 2010, but you’ll start paying for it in 2010. The first actual ten years of partial and full operation (2011-2020) will actually cost more than $1 trillion. The CBO’s estimate is that, by the close of 2030, Senator Baucus’ bill will have slashed spending on Medicare and other health programs by more than $2.6 trillion. The Medicare Hospital Trust Fund, which pays for the largest portion of Medicare, has been projected to be bankrupt by 2017, yet Senator Baucus identified hundreds of billions in Medicare savings which he uses to finance his healthcare reform spending, rather than rescue the Medicare Hospital Trust Fund.. The reason the Medicare  Fund is facing bankruptcy? Continual looting of the fund by Congress.

The Baucus bill has other surprises. It would cut Medicare payments to physicians by 25% in 2011 and keep them at that level, despite the certainty of future inflation. If the Baucus bill cuts in Medicare payments to physicians actually becomes law, how willing do you think physicians will be to accept any Medicare patients?

What other undisclosed booby traps does his healthcare reform contain? The cost of the bill is predicated on everyone being forced by law to buy healthcare coverage, thereby contributing to the pool of funds to pay for it. Those that don’t buy the coverage will be fined. Just suppose you’re young, healthy and currently have no health insurance. You don’t think you need it. Under the government plan you must buy it or pay a fine. The cost of the fine, per year, is projected to be somewhere between $1000 and $1900, depending on which politician you listen to. That’s less than 25% of what the health insurance premium would be for a single person. You know that under the government health reform plan you cannot be refused insurance for a pre-existing condition, so isn’t it cheaper for you to just pay the fine and not get insurance until you are sick? Of course it is, but what’s the problem? The problem is that the cost of premiums is designed so that the premiums paid by the young and healthy, those who would rarely use the insurance, are needed to subsidize the cost of providing coverage to the elderly and chronically ill. Without the premiums from the young and healthy, who don’t use the insurance services, to help pay the cost of services to the elderly and chronically ill, who do use healthcare benefits, the system implodes and the cost of premiums to those who carry the insurance will skyrocket. It becomes unaffordable for almost everyone-a house of cards susceptible to the slightest ill wind that can only be subsidized by even higher taxes, even higher premiums and a higher government deficit.  

 

But that’s not all. There’s also a provision that raises the threshold at which medical expenses become tax deductible, from the current 7.5 percent of income to 10 percent of income, which would reportedly yield the government $15.2 billion in new revenue from sick and disabled Americans with high out-of-pocket medical costs.

 

Are there better solutions to the healthcare dilemma? Of course there are. Allow insurance companies to sell insurance across state lines, increasing competition. Make the total amount taxpayers pay for their healthcare insurance and medical expenses a tax deductible item. Initiate tort reform to limit the enormous settlements in medical malpractice cases- most of which goes to pay the attorneys, not the patient. Physicians pay huge premiums for malpractice insurance. Tort reform will reduce the amount doctors must pay in malpractice insurance, which can be passed on to patients. Why won’t Democrats consider tort reform? Because of the huge financial support that attorneys provide to their election campaigns. 

The government claims it can pull $500 billion from Medicare just by eliminating fraud and waste. Okay, I’ll buy that. Prove it to me - by starting to eliminate fraud and waste now.

The government’s healthcare reform plan is based on smoke and mirrors. It is a best case scenario that ignores the likelihood of non-participation of the young and healthy and gives a first decade cost projection based on ten years of premiums paid by taxpayers- but only five years of full program operation. It’s an economic nightmare waiting to happen. We’ve already seen the fraud, corruption and back room deals that resulted from the government bailouts, the non-stimulating Stimulus bill and government falling all over itself to shovel money at entities rife with corruption. It’s time for taxpayers to stop writing the government blank checks and hoping for the best. We can fix our current private healthcare system in reasonable increments-we don’t have to create an entirely new one. And how about cleaning up Congress while they are at it? We’d all be better off for it.