Rep. Ryan Exposes True Health Care Costs as Enacted

Rep. Paul Ryan (R-Wisc.), top Republican on the House Budget Committee, has emerged in the 111th Congress as a leading and trusted voice in opposition to Obamanomics and the administration’s out-of-control spending. 

During the health care cram down last month — and particularly at the Blair House “summit” dog and pony show in February — Ryan confronted President Obama and the Democrats on details of the hidden costs and budget gimmicks used to mask the true costs of their legislation.

Ryan has now issued a review of the unpopular legislation “as enacted” into law that exposes the true cost of the original Senate bill combined with the reconciliation bill — which of course also now includes a government takeover of the student loan industry.

Ryan offers a look at some key components of the legislation.  From the review:

  • The measure creates a new, open-ended health care entitlement for anyone earning up to 400 percent of the poverty level.
  • It imposes an unprecedented Washington mandate that forces everyone to buy health insurance, or pay a fine.
  • It essentially eliminates the individual insurance market by prohibiting individuals from using their government health coverage subsidies outside the new federally regulated insurance exchanges.
  • Its “play or pay” scheme, sold as a way of encouraging employers to provide coverage, may actually do the reverse if the penalties cost companies less than providing health coverage. As a result, workers may be pushed off their job-based health insurance and forced to buy a government-subsidized plan.
  • It expands the Federal workforce — already on track to add 274,000 employees by the end of this year — including legions of Internal Revenue Service agents to monitor its new tax provisions.
  • It nationalizes the regulation of health insurance premiums, usurping a State government role and further smothering the normal market forces that would otherwise encourage innovation and cost-saving efficiencies.
  • It ignores the real cost drivers in health care, such as the third-party payment system, which promotes overconsumption; the rising costs of health care services; and the payment mechanisms that encourage doctors to provide more services, not necessarily better outcomes.
  • It lets Washington decide what kind of health insurance will be available. The proposal gives the Secretary of Health and Human Services [HHS], and a new Health Benefits Advisory Committee — an unelected group of Federal bureaucrats — unprecedented power to create and change the requirements for “acceptable coverage.” This will in turn restrict competition, stifle innovation, and limit the kinds of coverage that will be available to Americans.

The review also highlights some of the budget gimmickry including source materials and charts to expose the true ten year projected cost of $2.6 trillion.  Again from the review:

  • The legislation contains roughly $2.6 trillion in total spending in the 10-year window once the new entitlement is implemented (2014-23).
  • It provides $464 billion for Federal subsidies to purchase government-run health coverage ($15 billion in excess spending relative to the Senate bill).
  • It adds $434 billion for Medicaid and the State Children’s Health Insurance Program ($48 billion in excess spending relative to the Senate bill). Medicaid already is growing by 23 percent this year (partly from the “stimulus” bill), and is projected to grow by about 11 percent next year, increasing the already heavy burdens on State government budgets.

Yet all this additional spending does not include $208 billion over 10 years for the “doc fix,” which was removed by the Democratic Leadership to hide the true cost of the health care legislation.

And Ryan gives us our first real look at the government takeover of the student loan industry:

A final irony in this package is the inclusion of a government takeover of the student loan industry, using the projected profits – assuming they materialize – to expand government now.  Title II of the Reconciliation Act of 2010 (H.R. 4872) contains the main components of the Student Aid and Fiscal Responsibility Act [SAFRA], which abolishes the 40-year-old Federal Family Education Loan Program [FFELP] as of 1 July 2010, and requires that all future Federal student loans be Direct Loans [DL]. This will turn the Department of Education into the seventh largest bank in the Nation.

From student loans to new taxes to costs and gimmicks, the footnoted, sourced, charted and graphed review can be found in its entirety in .pdf form online here

I asked Gary Wolfram, the William Simon Professor of Economics and Public Policy at Hillsdale College about the unintended consequences we’re likely to see from this health care bill.  Wolfram said it is fraught with negative effects on the American economy.

“The great Austrian economist, Ludwig von Mises, wrote more than 80 years ago about the failures of central planning and the negative effects of unintended consequences from government action,” Wolfram told HUMAN EVENTS.  “Frederic Bastiat, the 19th century political economist, wrote that the difference between a good economist and a bad economist is the bad economist sees the seen, while the good economist sees the unforeseen.” 

“The unforeseen consequences of a 2000 page bill that places the health care industry under the heavy hands of central planners will have large and unintended effects that will make all of us poorer, but will especially harm those in the lower ends of our income distribution,” Wolfram continued.  “As one example, suppose the state of California finds the $2 billion added federal mandate too much and eliminates its Medicaid program to let its poor take advantage of the federal subsidy.  When Congressman Waxman makes it clear that he was unaware of the massive tax increase imposed by this legislation on companies such as AT&T, it is a signal that we are in for a very large disaster that will take decades to clear up.”

And the impact on jobs?

“The massive tax increases in the bill will make it more expensive to hire people, something that should be avoided in an economy with nearly 10% unemployment,” Wolfram said.  “The federal subsidies for purchasing health care from government insurance pools will severely affect the private insurance industry and result in further government control of health care.” 

“The bill is designed to expand third party payment, which drives up health care costs, and to reduce true health insurance,” Wolfram said.  “The only way the program works will be for the federal government to set prices for health care services and ration health care through a bureaucratic process.” 

“All of us will suffer from reduced health care services and reduced production and employment,” Wolfram concluded.  “The wealthiest of us will be able to get along, but those who are lower and middle class will be forced to receive poor quality health care, will wait for services that are now available on a timely basis, and are most likely to be among the unemployed and underemployed that the bill will produce.”  


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