NCPA - National Center for Policy Analysis


November 20, 2009

Senate Majority Leader Harry Reid (D-Nev.) has finally unveiled his massive 2,074-page health care bill.  The Congressional Budget Office (CBO) reports that the insurance-expansion provisions would cost the feds $848 billion over 10 years, says Michael F. Cannon, director of health policy studies with the Cato Institute.

To raise those funds:

  • The bill would tax wages, medical devices, prescription drugs, sick people, health insurance premiums (twice), health savings accounts (HSAs), flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), and cosmetic surgery.
  • The remainder would supposedly come from $491 billion of Medicare cuts, even though Medicare's chief actuary says such cuts are "unrealistic" and "doubtful."
  • The $848 billion only accounts for part of the federal government's share of the tab. There is other new federal spending.

There are also costs that Reid and his comrades have pushed off the federal budget.  For example, the $25 billion unfunded mandate that Reid would impose on states, will bring the total thus far to over $1 trillion, says Cannon.

The biggest hidden cost is that of the private-sector mandates, says Cannon:

  • In both the Clinton health plan and the Massachusetts health plan, the private-sector mandates -- the legal requirements that individuals and employers purchase health insurance -- accounted for 60 percent of total costs.
  • That suggests that if the Reid bill's cost to federal and state governments is $1 trillion, then the total cost is probably $2.5 trillion, and Harry Reid -- like House Speaker Nancy Pelosi -- is hiding $1.5 trillion of the cost of his bill.

Without a cost estimate of the private-sector mandates, Reid has not yet satisfied the request made by eight Democratic senators for a complete CBO score of the bill 72 hours prior to floor consideration.  The House passed its bill without a complete CBO score.  The Senate should not follow suit, says Cannon.

Source: Michael F. Cannon, "The Reid Bill: "Holy War?", November 19, 2009.

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