NCPA | Daily Policy Digest

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Daily Policy Digest

THE FIX IS IN: DANGEROUS HEALTH BILL COMING TO FINAL VOTE

10 Mar 2010 08:10:58 CDT -

After months of posturing, President Obama has made it clear: the Senate bill is the final bill.  The bill that narrowly passed the Senate on Christmas Eve by a partisan vote (prior to the election of Republican Scott Brown from Massachusetts), will more or less be the final bill.  The only way the massive 2,700-page health care bill will become law is if the House now passes the Senate-passed bill, says the U.S. Chamber of Commerce.  

If the Senate bill is passed into law with the President's reconciliation adjustments, the following dangerous policies will become law, says the Chamber: 

• You cannot keep the plan you have; all health insurance plans will be subject to numerous new mandates, requirements, regulations and bureaucratic oversight, which will force the plans to raise prices and change or eliminate plan offerings.
• Your health care costs will increase; the bill will do very little to control costs, while simultaneously taxing the health industry -- taxes consumers will pay -- and forcing Americans to purchase more expensive health insurance.
• Your taxes will increase; there will be a massive new payroll tax, a new tax on investments and 401(k)s, a new tax on "Cadillac" health benefits, new taxes on medical devices and prescription drugs, new taxes on all health insurance policies, and increased taxes in the form of cost-shifting through lower payments to hospitals and doctors. 

Also: 

• The debt, the deficit and federal spending will increase; despite a number of accounting gimmicks, like starting the taxation before the program spending begins, and double-counting $500 billion in Medicare cuts, the bill's true cost will be trillions of dollars. The bill creates new entitlements that will increase forever, much like Social Security and Medicare.
• Medicare will be cut by $500 billion; the Congressional Budget Office clearly stated: "20 percent of Part A providers would become unprofitable" and stop seeing Medicare patients.
• Jobs will be lost, or never created; the bill creates a huge incentive not to hire low-wage workers or grow a business beyond 50 employees. Employers who hire a low-wage worker, even if they offer great health insurance, could be fined $3,000 per year. 

Source: James Gelfand, "The Fix Is In: Dangerous Health Bill Coming to Final Vote," U.S. Chamber of Commerce, March 9, 2010. 

For text:

http://www.chamberpost.com/2010/03/the-fix-is-in-dangerous-health-bill-coming-to-final-vote.html

For more on Health Issues:

http://www.ncpa.org/sub/dpd/?Article_Category=16

STATE INSURANCE EXPERTS SEE FLAW IN OBAMA'S PLAN TO CURB HEALTH PREMIUMS

10 Mar 2010 08:10:57 CDT -

At the heart of President Obama's drive to rein in health costs is a proposal for federal review and regulation of health insurance premiums, with a new agency empowered to block excessive rate increases, says the New York Times. 

State officials are leery of the proposal, which raises a host of questions: How would Congress define "excessive?"  How would the new federal power relate to state insurance regulation? 

The proposal has great political appeal, says the Times.  But experts see a serious potential problem -- federal officials will focus on holding down premiums while state officials focus on the solvency of insurers, the ultimate consumer protection: 

• Economists say that holding down premiums does not necessarily hold down the cost of care, which reflects the prices charged by doctors and hospitals and the volume of services.
• State officials worry that they would be left to police the solvency of health insurance companies while federal officials pressured insurers to reduce premiums, as Obama has done in recent days.  

"You can't separate the underlying solvency of companies from the rates they charge," says Sean Dilweg, the insurance commissioner in Wisconsin.  "The federal proposal would be a huge pre-emption of decisions that states have made over their history." 

Mary Beth Senkewicz, a deputy insurance commissioner in Florida, says, "If you divorce rate-setting from financial oversight, that's a fundamental flaw." 

"Premiums must be reasonable in relation to the benefits," Senkewicz says.  "That becomes a fairly complex analysis." 

Insurance commissioners say they fully support efforts to expand coverage and rein in health costs, but it would be risky to hold down premiums before costs were under control.  And they do not expect the federal legislation to drive down costs anytime soon. 

Sandy Praeger of Kansas, one of several insurance commissioners who met with Obama at the White House last week, says "You are not necessarily helping the consumer if you keep rates artificially low.  What's worse for the consumer: Having a premium increase or having to pay the full amount of a medical expense because the company is out of business?" 

Source: Robert Pear, "State Insurance Experts See Flaw in Obama's Plan to Curb Health Premiums," New York Times, March 8, 2010. 

For text:

http://www.nytimes.com/2010/03/09/health/policy/09rates.html

For more on Health Issues:

http://www.ncpa.org/sub/dpd/?Article_Category=16

ARE UNEMPLOYMENT BENEFITS NO LONGER TEMPORARY?

10 Mar 2010 08:10:56 CDT -

Millions of Americans have been forced to rely on unemployment payments for extended periods as the nation struggles through its longest period of high joblessness in a generation.  Critics are taking aim, saying that the Depression-era program created as a temporary bridge for laid-off workers is turning into an expensive entitlement. 

• About 11.4 million out-of-work people now collect unemployment compensation, at a cost of $10 billion a month.
• Half of them have been receiving payments for more than six months, the usual insurance limit.
• But under multiple extensions enacted by the federal government in response to the downturn, workers can collect the payments for as long as 99 weeks in states with the highest unemployment rates -- the longest period since the program's inception.  

The unemployed say extensions help to tide them over in unusually difficult times when jobs are hard to come by: 

• Although unemployment held steady at 9.7 percent in February, millions of jobs have been lost in the downturn, particularly in the hardest-hit sectors including real estate, construction, manufacturing and financial services.
• Those jobs are unlikely to return even when the economy recovers, many experts say.  

But complaints that extending unemployment payments discourages job-seeking have begun to bubble into the political debate, says the Washington Post: 

• Sen. Jim Bunning (R-Ky.) recently single-handedly held up the latest extension, a bill to keep unemployment benefits in place for 30 more days, saying Congress should find other cuts to cover its $10 billion price tag.
• Sen. Jon Kyl (R-Ariz.) did not join Bunning's effort, but he defended his colleague's point of view.
• Kyl told the Senate he questioned why anyone would see unemployment benefits as helpful to the economy, or to the job market.  

"If anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work," Kyl said.  "I am sure most of them would like work and probably have tried to seek it, but you can't argue it is a job enhancer." 

Source: Michael A. Fletcher and Dana Hedgpeth, "Are unemployment benefits no longer temporary?" Washington Post, March 9, 2010.

For text:

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/08/AR2010030804927_pf.html

For more on Federal Spending & Budget Issues:

http://www.ncpa.org/sub/dpd/?Article_Category=25

SIX REASONS TO DOWNSIZE THE FEDERAL GOVERNMENT

10 Mar 2010 08:10:55 CDT -

There are six reasons to downsize the federal government, says Chris Edwards, director of tax policy studies at the Cato Institute. 

Additional federal spending transfers resources from the more productive private sector to the less productive public sector of the economy: 

• The bulk of federal spending goes toward subsidies and benefit payments, which generally do not enhance economic productivity.
• With lower productivity, average American incomes will fall. 

As federal spending rises, it creates pressure to raise taxes now and in the future: 

• Higher taxes reduce incentives for productive activities such as working, saving, investing and starting businesses.
• Higher taxes also increase incentives to engage in unproductive activities such as tax avoidance. 

Much federal spending is wasteful and many federal programs are mismanaged: 

• Cost overruns, fraud and abuse, and other bureaucratic failures are endemic in many agencies.
• It's true that failures also occur in the private sector, but they are weeded out by competition, bankruptcy and other market forces; we need to similarly weed out government failures. 

Federal programs often benefit special interest groups while harming the broader interests of the general public: 

• Horse-trading in Congress allows programs to be enacted even though they are only favored by minorities of legislators and voters.
• One solution is to impose a legal or constitutional cap on the overall federal budget to force politicians to make spending trade-offs. 

Many federal programs cause active damage to society, in addition to the damage caused by the higher taxes needed to fund them: 

• Programs usually distort markets, and they sometimes cause social and environmental damage.
• Some examples are housing subsidies that helped cause the financial crisis, welfare programs that have created dependency, and farm subsidies that have harmed the environment. 

The expansion of the federal government in recent decades runs counter to the American tradition of federalism: 

• Federal functions should be "few and defined" in James Madison's words, with most government activities left to the states.
• The explosion in federal aid to the states since the 1960s has strangled diversity and innovation in state governments because aid has been accompanied by a mass of one-size-fits-all regulations. 

Source: Chris Edwards, "Six Reasons to Downsize the Federal Government," Cato Institute, March 3, 2010. 

For text:

http://www.cato-at-liberty.org/2010/03/03/six-reasons-to-downsize-the-federal-government/ 

For more on Federal Spending & Budget Issues:

http://www.ncpa.org/sub/dpd/?Article_Category=25

LOW-TAX TEXAS BEATS BIG-GOVERNMENT CALIFORNIA

10 Mar 2010 08:10:54 CDT -

Despite similarities in their histories and demographic makeup, Texas and California differ greatly in terms of their respective approaches to public policy.  With its low taxes and "hands-off" economic policies, Texas' economy is booming and the state is experiencing a population inflow.  Meanwhile, California's recent experience has been quite the opposite, thanks to its expensive and increasingly incompetent government, says Michael Barone, a resident fellow at the American Enterprise Institute (AEI). 

California has gone in for big government in a big way, says Barone: 

• Democrats hold big margins in the legislature largely because affluent voters in Los Angeles and the San Francisco Bay Area favor their liberal positions on cultural issues.
• Those Democratic majorities have obediently done the bidding of public employee unions to the point that state government faces huge budget deficits.
• Gov. Arnold Schwarzenegger's attempt to reduce the power of the Democratic-union combine with referenda was defeated in 2005 when public employee unions poured $100 million -- all originally extracted from taxpayers -- into effective TV ads. 

Texas differs vividly from California, says Barone: 

• Texas has low taxes -- and no state income taxes -- and a much smaller government.
• Its legislature meets for only 90 days every two years, compared with California's year-round legislature.
• Its fiscal condition is sound and public employee unions are weak or nonexistent. 

In the meantime, Texas' economy has been booming.  Unemployment rates have been below the national average for more than a decade, as companies small and large generate new jobs, says Barone. 

And Americans have been voting for Texas with their feet, says Barone: 

• From 2000 to 2009, some 848,000 people moved from other parts of the United States to Texas, about the same number as moved in from abroad.
• That inflow continued in 2008-09, when 143,000 Americans moved into Texas, more than double the number in any other state; at the same time 98,000 were moving out of California.
• Texas is on the way to gain four additional House seats and electoral votes in the 2010 reapportionment. 

Source: Michael Barone, "Low-Tax Texas Beats Big-Government California," Washington Examiner, March 7, 2010. 

For text:

http://www.washingtonexaminer.com/politics/Low-tax-Texas-beats-big-government-California-86681467.html 

For more on Government Issues:

http://www.ncpa.org/sub/dpd/?Article_Category=33

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