The Senate’s health care bill became law earlier this week, but that does not mean the fight against a government overhaul of our nation’s health system is over. This week, the Senate will consider amendments to the reconciliation bill passed by the House alongside the Senate health bill, H.R. 3590. This process will provide a chance to ameliorate the numerous shortcomings of the passed legislation, and will provide Americans with a glimpse at the true intentions of their elected officials as they are forced to take a stance on difficult questions regarding changes to the bill. Here, we outline some of the amendments put forth and the Senate’s verdict:

Protecting Medicare Savings. Senator Judd Gregg (R-NH) offered an amendment to protect new savings from Medicare from being used to fund new entitlements. The passed legislation and the reconciliation package would create a combined $529 billion in cuts to Medicare spending over ten years. Lawmakers claim these cuts will be applied to increase the program’s solvency, which will otherwise cause $38 trillion in unfunded liabilities to the taxpayers. Unfortunately, this is unlikely to be the case: proponents of the bill tried to have it both ways by double counting savings from Medicare, but according to the Congressional Budget Office, “…the savings to the HI trust fund under the PPACA would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs.” Sen. Gregg’s amendment would have ensured prolonged fiscal sustainability of Medicare; however, the Senate voted to table the amendment with a vote of 56-42.

Getting Rid of Special Deals. When President Obama took office, he promised to introduce transparency to the legislative process. Instead, the White House and congressional leadership resorted to backroom deals and shady tactics to pass the monumentally unpopular health care bill. Senator John McCain (R-AZ) offered an amendment that would remove all the sweetheart deals added to lure needed votes for the bill. These include, but are not limited to, increases in Medicaid Disproportionate Share Hospital payments for Tennessee and Hawaii, the “Louisiana Purchase”, Medicare coverage for Libby, Montana residents exposed to environmental hazards, and $100 million for hospitals in Connecticut. Sen. McCain’s amendment was tabled with a vote of 54-43, leaving taxpayers to foot the bill for these special deals used to pass legislation they didn’t like in the first place.

Removing Taxes on the Middle Class. Another of the President’s campaign promises was that he would not increase taxes on individuals making under $200,000 or families making $250,000. But the health bill the President signed this week carries with it a handful of new taxes that would affect all Americans, regardless of income, including a penalty for failure to purchase a government-approved health plan, taxes on high-cost insurance plans, and taxes on medical necessities such as prescription drugs and medical devices. Senator Mike Crapo (R-ID) offered a motion to commit the health bill to the Finance committee to ensure that it met the President’s promise not to increase taxes on the middle class. The Senate voted to table this amendment with a vote of 56-43.

Protecting Jobs and the Economy. The health bill includes an employer mandate that will punish employers for failing to offer insurance to their workers. The unintended consequences of this provision will be multitudinous: it will encourage employers to avoid hiring low-income workers, it will encourage employers who must hire a high proportion of low-income workers to drop the coverage they currently offer, and it will result in loss of jobs and lower wages. To combat this, Senator Mike Enzi (R-WY) offered a motion to commit the bill to the Finance Committee to strike the employer mandate and replace it with other offsets. The Senate voted 58-41 to table this amendment.

Preventing Premium Increases. Our nation’s health care system faces out-of-control growth in health spending, and will continue to do so after enactment of the liberals’ health care package. The bill does nothing to bend the cost curve, instead increasing total national health expenditures. Moreover, provisions in the bill such as federally-mandated benefits and the combination of guaranteed access to insurance with an individual mandate that is significantly less expensive than a health plan, will cause premiums to rise. CBO has found that H.R.3590 would increase premiums in the individual market by as much as 13 percent, and the effects expected by our analysts are even more severe. Senator John Barrasso (R-WY) offered an amendment requiring that no provisions in the bill would result in premium increases—this amendment was tabled with a vote of 57-41.

Subjecting Lawmakers to Obamacare. The President has indicated that the care Americans will receive under his health care package will rival the popular Federal Employee Health Benefits Program (FEHBP) through which members of Congress and other federal employees purchase insurance. Senator Charles Grassley (R-IA) offered an amendment which would force proponents of the package to put this claim to the test by requiring that the President and all members of Congress and their staff receive health care through the newly-created exchanges rather than through the FEHBP. Was the Senate willing to take the plunge? It appears not—the amendment failed by a vote of 56-43.

One day after the Senate’s mammoth, 2,700-page health bill became law, the Associated Press has discovered the legislation doesn’t deliver on a key promise.

Despite repeated assurances that the measure would provide immediate health coverage for children with pre-existing medical conditions, it doesn’t.

Just two days before the crucial House vote, at his nationally televised pep rally for the bill, President Obama promised: “Starting this year, insurance companies will be banned forever from denying coverage to children with pre-existing conditions.”

Meeting with House Democrats the next day, he forcefully reiterated the claim:

“This year … parents who are worried about getting coverage for their children with pre-existing conditions now are assured that insurance companies have to give them coverage — this year.”

You’ll recall that, on March 10, House Speaker Nancy Pelosi announced:

“We have to pass the bill so that you can find out what is in it.”

It seems even the president had to wait until after passage to find out what was really in the bill. Turns out, some kids with pre-existing conditions will have to wait, too. Another four years. The iron-clad guarantee of coverage won’t kick in until then.

Notes the Associated Press: “Full protection for children would not come until 2014, said Kate Cyrul, a spokeswoman for the Senate Health, Education, Labor and Pensions Committee…. That’s the same year when insurance companies could no longer deny coverage to any person on account of health problems.”

By signing the legislation, Obama already broke his campaign promise not to raise “any form” of taxes on families making less than $250,000 per year. The reconciliation bill adds even more taxes for Americans — an estimated $52.3 billion over 10 years, according to a new analysis from Americans for Tax Reform.

ATR’s Ryan Ellis spoke at The Bloggers Briefing yesterday about the reconciliation measure: “We lost a major fight on Sunday. That fight is lost; President Obama has signed it into law. Rather than wallowing … and waiting until the election, we have a fight this week on the floor in the Senate. Do we want to have an additional tax increase on top of the tax increase that has just been signed into law?”

Heritage’s Robert Book, Guinevere Nell and Paul Winfree have been documenting these tax changes, noting how the legislation imposes new taxes on employers, the sick, and low-income and moderate-income workers.

Below is a table showing taxes that apply to everyone regardless of income.

At the signing of the Senate health bill today, President Barack Obama said: “In a few moments, when I sign this bill, all of the overheated rhetoric over reform will finally confront the reality of reform.” Let’s review some of the “overheated rhetoric” that is about to get tested by reality.

Over the past months, the President and Congress have promised: that premiums would drop by $2500 per family; that if you like what you’ve got, you can keep it; that it would bend the cost curve down; that it would decrease the federal deficit. The fact of the matter is, none of these things will become reality once the bill is implemented—these claims are nothing but the rhetoric attached to an unpopular piece of legislation in the hopes of creating support that has yet to materialize.

The truth about the bill is already becoming evident as effected parties become vocal with their concerns. Some highlights just from today’s headlines include:

State Medicaid Programs Worry About Cost of Expansion: The bill will increase coverage among the uninsured largely through the expansion of Medicaid, a low quality, poorly structured government health care program which is paid for jointly by the federal and state governments. Though the bill will cover the cost of the benefits expansion, it will not cover the added administrative costs, which Heritage analyst Ed Haislmaier has highlighted. According to an article on Bloomberg.com, “States faced with unprecedented declines in tax collections are cutting benefits and payments to hospitals and doctors in Medicaid, the health program for the poor paid jointly by state and U.S. governments. The costs to hire staff and plan for the average 25 percent increase in Medicaid rolls may swamp budgets.”

Haislmaier projects the added administrative cost to the states would total $9.6 billion between 2014, when the provision is implemented, and 2019. This extra burden comes at a time when states are trying to tighten their budgets to account for decreasing revenues. Research by former Heritage analyst Dennis Smith and Ed Haislmaier shows that, as the fiscal burden of the Medicaid expansion grows, it would be in states’ interests to drop the program entirely: “The savings to state budgets are so enormous that failure to leave Medicaid might be viewed as irresponsible on the part of elected state officials. The federal government, however, would be left holding a trillion-dollar-plus tab.”

Businesses that Offer Already Offer Insurance Face Growth-Stifling Expenses: Caterpillar Inc. recently addressed a letter to House leadership claiming that the health care legislation passed Sunday would result in over $100 million in new costs for the company in the first year of implementation alone, due to the increase in Medicare taxes and mandated benefits. Said the letter, “We can ill-afford cost increases that place us at a disadvantage versus our global competitors.” Effects of the bill’s provisions will include job loss, wage reductions, and reduced hours, as testified by more than 130 economists in a letter to President Obama and members of Congress.

In recent research, Heritage analysts Karen Campbell and Guinevere Nell further demonstrate that the economic impact of taxing investments to pay for the bill will be disastrous. In recent months, Americans have made it adamantly clear that their top priority is jobs and the economy—instead, Congress has delivered a health bill that will harm both and burden the ability of American companies to compete globally.

And this is just the tip of the iceberg. The negative unintended consequences of the Senate bill will be quick to surface now that the bill has been signed into law. Americans must remain aware of the direction in which this legislation will lead our nation such that the requisite change will be swift and sure.

In the final hours before the passage of Obamacare, Rep. Bart Stupak (D-MI) and his like-minded Democratic colleagues announced that they would vote for the legislation after President Barack Obama agreed to sign an executive order purporting to prevent the federal government from funding abortions. But one of the problem’s with this approach is that the President isn’t bound to preserve the executive order for any length of time. The President could wake up the day after signing this executive order and rescind it. Stupak himself acknowledged this in an interview with Fox News’ Megyn Kelly:

Kelly: What is to stop this openly pro-choice President from reversing himself on this? We’ve seen him on the other deals that were offered to get Senator’s votes in connection with this bill. What is to stop him from reversing himself on this executive order now that he has got your vote?

Stupak: Well that’s why we have asked for it to be public. We will have a public signing of this …

Kelly: The Senate deals were public too …

Stupak: I know. And you’re right, Megyn, there is nothing that would stop this President from a month from now, a year from now, 10 years from now, [from] repealing this executive order.

The plain truth is that an executive order is simply not the same as enshrining these pro-life protections into the health care bill.

But the leftist majorities in Congress just do not care what the American people think. Today, the Senate will press forward with work on the proposed “fix-it” bill through the reconciliation process. You may have thought it was impossible to make the policy and process of Obamacare even worse, but that is exactly what this reconciliation bill does:

Abuse of Process: According to the Congressional Research Service, 19 reconciliation measures have been enacted into law since the procedure’s first use in the Carter administration. The record shows that reconciliation has been used for virtually all imaginable scenarios — save one: There is no precedent for using it to enact a once-in-a-generation rewrite of the relationship between Americans and their government that appeals exclusively to one side of the aisle. But that is exactly what Majority Leader Harry Reid (D-NV) is attempting to do. According to the latest NBC News/Wall Street Journal poll, a plurality of the American people strongly oppose this procedural tactic for this highly unpopular policy.

Even Higher Deficits: According to the Congressional Budget Office, new entitlement spending in the reconciliation bill would cost $216 billion in 2019 alone and will increase by 8% every year after that. Now, the Democrats will tell you that the CBO has also said their plan raises enough taxes and cuts enough Medicare to pay for this gigantic new entitlement. But the CBO is obligated by law to believe whatever Congress tells them. The American people are not. According to the latest NBC/WSJ poll, 76% of the American people do not trust Congress. That is why, according to the latest CNN poll, 70% of the American people believe Obamacare will cause the federal budget deficit to go up.

Even Higher Taxes on Business: As bad as the employer mandates in the Senate health bill were, the taxes on businesses in the reconciliation bill are even worse. Companies that hire certain low-income Americans will have to pay $3,000 per employee, per year, even if the company offers insurance. And companies that employ 50 or more workers will face higher tax penalties to the tune of $2,000 per full-time employee.

New Taxes on Investments: Investment is what creates job growth. One would think at a time of 9.7% unemployment, the government would not want to increase taxes on investment. Not this leftist government. The reconciliation bill slaps a 3.8% tax on investment income.

Cornhusker Kickbacks for All: You may have heard that the reconciliation bill “got rid of” the Cornhusker Kickback. That is not quite true. What it really did is extend the additional Medicaid funding Nebraska got to every state. But to keep the new entitlement spending deficit neutral, the new Medicaid funding creates a fiscal time bomb for states by vastly cutting Medicaid reimbursements in 2015. This reconciliation will only further strain already bankrupt state governments.

A Government Takeover Preview: Sen. Ben Nelson (D-NE) has already announced he will vote against the reconciliation bill because of the government takeover of the student loan industry that Democrats tacked onto the health care bill in order to help pay for the new entitlement. The student loan debacle is unfortunately just a preview of the direction the left wants to see health care go. The government first justified subsidizing student loans in the Clinton administration by saying it would make college more affordable. The opposite happened. College costs have only skyrocketed, just like health care costs will only sky rocket under this bill. So now this reconciliation bill is completely nationalizing the student loan industry. Unless the direction of health care policy changes, our health care sector will not be far behind.

Late last night, in a narrow and partisan vote, the U.S. House of Representatives passed the most significant piece of social legislation in over seven decades. It did so in the face of overwhelming and principled opposition from the American people. Large majorities of Americans oppose this legislation because it offends the historic American dedication to the principle of self-government. They understand that this new law will accelerate Washington’s intrusion into our most personal and private decisions.

This is why opposition to this bill will only grow. Supporters of this bill argue that popular hostility will recede upon its passage. But, rather than cementing our descent into a European-style welfare state, last night’s passage of Obamacare is best seen as a historic turning point, a true catalyst for real change.

I write to reassure our supporters, the conservative movement, and the American people at large that The Heritage Foundation will do all within its power to keep this issue alive in the public square and make the intellectual case for the repeal of this act. We will bring all our resources to bear on behalf of those who believe America is and will always remain the Land of the Free.

This, rest assured, can be done. The American people are never permanently thwarted. President Obama’s health care legislation can and will be repealed.

Those who supported this bill are our fellow Americans, and we do not question their good will or patriotism. In public policy, however, good intentions alone do not suffice. And let there be no mistake, our philosophical differences with supporters of this bill are profound. The reason government-run health care has been the holy grail of the left for decades is that liberals realize as much as we do that it is a giant step toward the creation of a European-style welfare state. This is an evolution Americans have always resisted because it is alien to our national character.

If there is one good thing about the past year—one in which we have witnessed unprecedented horse-trading, press stunts, midnight votes and political manipulation in both houses of the U.S. Congress—it is that the American people have come away educated as never before about the differences between these two visions for America. Americans are strongly opposed to this bill not because they have been hoodwinked but because they understand this bill both in its particulars and at an instinctive, gut level.

They understand this health care bill forces individuals and employers to buy insurance policies designed by government bureaucrats. This intrusion is intended to follow us from cradle to grave.

Instead of empowering families and individuals to make their own choices, Obamacare empowers the bureaucracy to make those decisions for them. It is this unelected bureaucracy, unanswerable to the electorate, that will determine the content of health benefits packages, including medical treatment and procedures, and how much will be paid for those services. Yesterday’s legislation brings us one step closer to fully government-run medicine, with expanded government power over the financing and delivery of medical services that is sure to ration care in the name of cost control.

You will hear the left say this new entitlement will be popular with the American people. Do not believe them for a second. Yes, 32 million people will gain the theoretical right to health insurance. But over half of that coverage comes from placing at least 16 million more Americans into Medicaid, an unpopular and overextended welfare program that already rations care.

Americans will not stand for it. The American love for liberty prevailed in our founding, and will prevail once again.

In December of 1773, to protest unjust taxation, a group of American colonists dumped tea in Boston Harbor. The punishment for that first Tea Party was a series of intrusive laws passed by Parliament that were so oppressive that they could only be described as the “Intolerable Acts.”

Obamacare is today’s Intolerable Act. And just as the colonists banded together to enact change after those acts were passed, so should America respond to Obamacare. This law must be repealed.

Much of the fight against this bill will be led by the individual states, a process we encourage. All told, 33 states have already taken steps to challenge various aspects of Obamacare, including its unprecedented mandate that every American purchase health insurance or face a steep penalty for noncompliance. Four additional States will have this question on the ballot in November.

On Capitol Hill, the initial battle over Obamacare will occur when Congress considers whether to fund the tens of thousands of new federal bureaucrats necessary to implement the new law. In the tradition of the Hyde amendment, which prevented federal funding for abortions through annual limitations appended to appropriations bills, conservatives should look to the appropriations process as our first line of defense. Straightforward funding limitations would prevent any Administration official or any bureaucrat from implementing the law.

Our health care system requires reform, and we have long advocated measures to improve our system. We can and should strengthen the ability of American families to choose the coverage they want, rather than giving that power to Congress and its agency bureaucrats. We can also spur competition and choice to bring efficiency and lower costs to the health system, in place of the bill’s deadening regulation and damaging price controls. And, above all, we should foster state innovation rather than Washington-based central planning.

But such reforms can only be considered once this tragedy of arrogance has been fully and completely repealed.

Fortunately, there are no permanent victories or defeats in Washington. For millions of Americans and for Heritage, Round One of this fight is over. Today, the Heritage Foundation is answering the bell for Round Two. Join our fight; become a part of our mission. Help us educate our lawmakers, as well as those who aspire to become tomorrow’s lawmakers. Together we can make the persuasive case for repeal of this Intolerable Act and thereby return us to our American destiny.

Onward!

Sincerely,
Edwin J. Feulner, Ph.D., President, The Heritage Foundation

This unprecedented congressional action will give Washington control over the content of health benefits packages; the kind of health insurance available to Americans and the organization and regulation of health insurance markets. This has been accompanied by one of the most shocking Congressional exhibition of arrogance and special interest deal-making in memory.

In 1774, in response to the first Tea Party, the British Parliament issued a series of acts designed to control the colonists, stop their protests and restrict their liberty. The Americans called these “The Intolerable Acts.”

Obamacare is today’s Intolerable Act. In poll after poll, in town hall meetings, in popular protests and in special elections, ordinary Americans have declared their firm opposition to this scheme, only to be derisively dismissed.

This imposition of legislation is intolerable for two reasons:

– Process: The outrageous way in which this massive restructuring of one six of the economy has been pushed through.

– Substance: Huge obligation shifted to future generations, a huge lurch toward European-style welfare states.

The Heritage Foundation will have a full answer to Congress’ action tomorrow and in the days and weeks and months to come. We will do all within our power to recommend, and make the intellectual case for, the repeal of these acts. We will help marshal the full resources of the conservative movement for this cause. You can join the fight to keep America the Land of the Free today

Fortunately, there are no permanent victories or defeats in Washington. For millions of Americans and for Heritage, Round One of this fight is over. Tomorrow morning, we are answering the bell.

In response to complaints from governors and state lawmakers, coupled with public outrage over the “Cornhusker Kickback,” section 1201 of Speaker Pelosi’s reconciliation bill amends the Senate bill to have the federal government cover all of the extra Medicaid benefit costs for all states in the first three years (2014-2016) with the federal share then declining so that from 2020 onward the Federal government would pay 90 percent of the costs with state taxpayers covering the remaining 10 percent.

New York Governor David Paterson, for one, has pronounced himself pleased with Speaker Pelosi’s solution and Democrats in New York’s congressional delegation are patting themselves on the back for securing this promised “improvement” to the Senate bill.

However, New York’s taxpayers and state legislators — as well as those in a some other states, most notably California — might be interested to learn that the Speaker’s bill also tosses them a Medicaid fiscal hand grenade with a five-year fuse attached.

Specifically, section 1202 of the reconciliation bill requires state Medicaid programs to pay primary care doctors rates for Medicaid patients that are equal to Medicare rates for two years in 2013 and 2014. This mandated physician pay hike would apply to services provided to all Medicaid patients, not just the “expansion population.” The federal government would also pick up 100 percent of the extra costs for this provision as well.

So what is the problem? Well, for a lot of states section 1202 will not be a problem, but for some — especially New York — it triggers a countdown to a state budget fight in five years.

To understand how and why that is so, one first needs to recognize a dirty little secret about Medicaid. Namely, the states that have expanded Medicaid eligibility to more of their populations have limited the cost of those expansions by slashing Medicaid physician payment rates. Of course, physicians in those states risk going broke if they see too many patients whose Medicaid reimbursement is less than the doctor’s costs, so most of them refuse to participate in Medicaid. The result is that those states have both the largest Medicaid rolls (as a percentage of the state’s total population) and the worst access to care and quality of care for Medicaid patients.

Put another way, some states like New York have already implemented in their Medicaid programs the classic leftist health care con job of offering more people government health insurance coverage that not only doesn’t increase, but actually decreases, their access to medical care.

The most recent available data from 2006 show that over one-quarter of New York’s population (27 percent), or more than 5.1 million individuals, are covered by Medicaid, but New York’s Medicaid program pays primary care doctors only 36 percent of the rates that they get for providing the same services to Medicare patients.

So, when section 1202 takes effect in 2013, primary care physicians in New York will suddenly get paid nearly three times as much as they previously did for treating Medicaid patients. That will certainly be good for doctors. It will also be good news for Medicaid patients, as it will make it more likely for them to actually get medical care.

But then what happens twenty-four months later on January 1, 2015 when the federal funding to cover the extra cost of that pay hike, goes away? Will New York physicians simply accept a return to the status quo ante with an effective 64 percent cut in their Medicaid rates, and will Medicaid enrollees simply accept the reduced access to care that such a physician payment cut will entail? Not likely.

New York’s normal federal match rate for Medicaid spending is 50 percent. So if New York lawmakers are to keep in place after 2014 the physician payment increase imposed by section 1202, they are going to have to get their own — already overtaxed — state taxpayers to cough up half the extra cost.

Of course, New York could try to get the Federal government to keep bailing it out, but how likely is it that U.S. Senators from states that got little or nothing in extra payments under section 1202 will vote to approve the “Empire State Bailout” of 2014?

Six states already pay their primary care physicians Medicaid rates that are equal to — or in the case of Alaska, Wyoming, Idaho and North Dakota — greater than Medicare rates. Another nine states pay Medicaid rates that are between 90 and 98 percent of Medicare rates, and a further 10 states pay Medicaid rates that are between 80 and 89 percent of Medicare rates. So, collectively exactly half of the states — including some of the poorest ones such as Mississippi, Louisiana and New Mexico — will get little or no benefit from section 1202. Why would their Senators be willing to keep bailing out New York at the expense of their own constituents?

The same holds true for some other states that will also be tripped up by section 1202, most notably, California. According to the same data, 29 percent of California’s population (over 10.5 million individuals) are in Medicaid, California’s Medicaid program pays its primary care doctors 47 percent of Medicare rates, and the state has a normal federal match rate for Medicaid spending of 50 percent. So, California primary care physicians will see their Medicaid payment rates more than double for two years, but then what happens?

Other states that will face the same problem, though to varying and generally somewhat lesser degrees than New York and California, are New Jersey, Rhode Island, Florida, Minnesota, Michigan, and Illinois. All of those states pay their primary care physicians Medicaid rates that are less than 60 percent of Medicare rates and all have federal Medicaid matching rates of between 50 and 58 percent.

If Speaker Pelosi gets her way reporters covering those states’ governments, particularly ones in Albany and Sacramento, should pencil in on their 2014 calendars a note to “cover state doc-fix battle.”