Back to Basics

U.S. Senator Roger Wicker

Lost in the ongoing debate over health care reform was a recent decision by Senate Democrats to delay yet again the introduction of their so-called cap-and-trade legislation. The decision, announced earlier this month by Sen. Barbara Boxer, the chairwoman of the Environment and Public Works Committee, is a sign that this misguided legislation has not gained the momentum Democrat leaders had hoped.

In reaction to the announcement, the Wall Street Journal said: “The latest delay is probably a submission to reality, which is a rare thing in the current political environment — and a major victory for the U.S. economy, at least for now.” I agree completely. Considering the blow cap-and-trade legislation would have on family budgets, the nation’s economic recovery, and our long-term competitiveness, the news of the bill’s delay was a welcome development.

The Carbon Tax

The House of Representatives narrowly approved cap-and-trade legislation in June. The legislation would ostensibly curb global warming by reducing the amount of carbon dioxide released into the atmosphere. In order to achieve this, companies that emit carbon dioxide — such as power plants, petroleum refiners, and manufacturers — would be forced to purchase allowances from the federal government for each ton of carbon dioxide emissions they produce.

The cost of these allowances would in effect be a massive tax levied on energy producers, manufacturers and other companies across our economy. This massive new tax would not simply be absorbed by the companies. It would be passed along to consumers by way of higher energy prices. This is not just my prediction. As a candidate for president, then-Sen. Obama admitted: “Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket.”

Since energy is used to make and provide other goods and services, Americans would see higher prices across the board.  In writing recently about cap-and-trade, Patrick Fleenor, the chief economist at the Tax Foundation, said that “other effects will be less obvious. Food prices will rise because energy is used extensively in the production and transportation of agriculture products.” In fact, during testimony before Congress, the director of the nonpartisan Congressional Budget Office said it was unlikely any consumer product’s price would remain the same under a cap-and-trade program.

Mississippi Impact

A recent study released by the Heritage Foundation provides a window into how a cap-and-trade system would negatively impact Mississippians. The group found that by 2035, Mississippi’s gross state product would be reduced by $3.4 billion if the House-passed cap-and-trade bill became law. Energy prices for everyone in the state would rise. By 2035, the study stated electricity prices would increase by more than $1,000 per household, and Mississippians would pay $1.27 more for a gallon of gasoline.

Cap-and-trade would also severely impact agriculture, our state’s largest employer. Under a cap-and-trade system, the American Farm Bureau Federation reported input costs for agriculture would rise by $5 billion. A recent report by the University of Missouri-Columbia found that under cap-and-trade, a typical corn, soybean, and wheat farm in that state could see increased costs of $11,649 in 2015 and $30,152 in 2050. Results anywhere close to this in Mississippi would be disastrous for the nearly 30 percent of workers in our state employed directly or indirectly by agriculture.

Wrong Direction

Our economy still has a long way to go before fully recovering.  Unemployment has jumped to a 26-year high of 9.7 percent. The last thing our economy needs is for Congress to implement a massive new energy tax that will trickle down and negatively affect every facet of our economy. That is exactly what a cap-and-trade program would do.  Such a scheme is wrong for our country, and I will continue working to ensure its defeat.

Under the title of Public Health & Workforce Development are a number of grants, scholarships and other programs, providing training, services and a whole new array of studies relating to health care – a lot of money being spent to support the expansion of government, special interests, illegal immigrants and labor unions, but little to help solve the health care issues.

The first expansion is the establishment of the Public Health Investment Fund, which requires deposits from the revenues of the Treasury in the amount of $88,700,000,000 over 10 years. This money is authorized to be appropriated by the Committee on Appropriations of the House and Senate for carrying out the activities under the designated public health provisions. These areas include Community Health Centers, National Health Service Corps Program, National Health Service Corps Scholarship and Loan Repayment Programs, Primary Care Loan Funds, Primary Care Education Programs, Nursing Workforce Development, The National Center for Health Statistics and the Agency For Healthcare Research and Quality.

To make these programs even more appealing is the stipulation that “Amounts appropriated under this section, and outlays flowing from such appropriations, shall not be taken into account for purposes of any budget enforcement procedures including allocations under section 302(a) and (b) of the Balanced Budget and Emergency Deficit Control Act and budget solutions for fiscal years during which appropriations are made from the fund.” More spending without any concern for balancing the budget or controlling the country’s deficit. We don’t have it, but let’s spend it!

The first program – Community Health Centers – will obtain increased funding in the amount of $38,800,000,000.

The National Health Service Corps is being amended allowing the Secretary to issue waivers to individuals who enter into a contract for obligated service to pay for their education. It further raises the loan repayment amount from $35,000 to $50,000 and will be adjusted thereafter to reflect inflation. Additional appropriated funds for this program are $796,000,000 over the next 10 years. Additional funding is authorized in the amount of $3,171,000,000 over 10 years to cover the National Health Corps Scholarship and Loan Repayment Programs.

The Frontline Health Providers Loan Repayment Program will be established to address unmet health care needs in certain areas, populations, or facilities as designated by the Secretary. Individuals participating in this program must agree to serve for a period of 2 years in a health professional needs area specified in the program. This program has a clause that if there are an insufficient number of applicants for the program, then all excess funds from the program will be transferred to the National Health Service Corps to recruit more people to take advantage of this fund.

The Secretary shall establish a primary care training and capacity building program consisting of grants and contracts to plan, develop, operate or participate in accredited professional training in the field of family medicine, general internal medicine, general pediatrics or geriatrics. Funds for this program are from the Public Health Investment Fund in the amount of $3,023,000,000 for 10 years and will include the following:

• Capacity Building in Primary Care – grants to specialties of family medicine, general internal medicine, general pediatrics or geriatrics, with preference given to entities that train individuals who are from underrepresented minority groups or disadvantaged backgrounds.
• Training of Medical Residents in Community-Based Setting – a program established for the training of medical residents in community-based settings, with preferences given to entities that support teaching programs addressing the health care needs of vulnerable populations or are a Federally qualified health center or rural health clinic, as well as preference to those training individuals from underrepresented minority groups or disadvantaged background.

• Training for General, Pediatric or Public Health Dentists and Dental Hygienists – grants and contracts to plan, develop, operate or participate in an accredited professional training program or oral health professionals, with preference given to individuals who are from underrepresented minority groups or disadvantaged backgrounds.

Grants for Health Professionals Education – Advanced Education Nursing Grants is being amended, including increases in dollar amounts for the Nurse Faculty Loan Program. Funding for this program is $1, 450,000,000 over 10 years.

The Public Health Workforce Corps is being amended and expanded by the following: Creating the Public Health Workforce Scholarship Program, Public Health Workforce Loan Repayment Program, Enhancing the Public Health Workforce, and Preventive Medicine and Public Health Training Grant Program. Appropriations for these programs total $642,000,000 over 10 years. The Enhancing the Public Health Workforce even includes provisions for veterinary medicine! I’m not sure how veterinarians will provide quality health care to people or decrease health care costs, but it’s nice to see even our animals will be included in the grant programs.

Under the Subtitle “Adapting Workforce to Evolving Health System Needs” there are a number of grants and programs including:

• Health Professionals Training for Diversity, which includes scholarships for disadvantaged students, loan repayments and fellowships regarding faculty positions, and educational assistant in health professions regarding individuals from disadvantaged background.

• The Nursing Workforce Diversity Grants is being amended and adding the Coordination of Diversity and Cultural Competency Programs.

• The Secretary will establish a cultural and linguistic competency training program for health care professionals, including nurses, consisting of grants and contracts to develop and implement models of cultural and linguistic competency training. Preference will be given to entities that address cultural and linguistic needs of the population and health disparities, and placing health professionals in regions experiencing significant changes in the cultural and linguistic demographics of populations, including communities along the United States-Mexico border. Obviously this program will benefit all the illegal immigrants coming from Mexico to obtain free health care.

Appropriations for these programs total $1,138,000,000 over 10 years.

Grants and contracts are given to develop training programs to promote the delivery of health services through interdisciplinary and team-based models, with preferences given to entities that demonstrated training to the greatest number of health professionals who serve in underserved communities.

For those who claim there are no additional “taxes” imposed by this bill, they should refer to Title IV, Amendments to Internal Revenue Code of 1986 in which you will find “Sec. 401 Tax on Individuals Without Acceptable Health Care Coverage” as the first item to be added.  This bill not only increases government spending but it WILL INCREASE TAXES in more than one way.  Unfortunately, this section constantly refers to the Internal Revenue Code, so without actually looking at that code it is impossible to tell exactly what is being change.  Many of the references include “strike this and add…” and many times this is an increase in percentages or wording changes, so you would have to refer to the IRS code to determine what affect this has.

There are a number of business related changes to the IRS Code, many of which I could not interpret.  So if you are a business owner, especially a small business owner, I would recommend you read this section to see how it would apply to you.  This whole section reads like Greek, and if you have ever tried to read and interpret the IRS manuals this section of the bill is written in the same manner.  Consult your representative or tax accountant for clarification.  Because of this, I have included only portions of the tax code changes that apply to individuals and some general requirements as they apply to businesses.

The first tax is one imposed on individuals who do not have acceptable health care coverage.  This tax is 2.5 percent of the excess of the taxpayer’s modified adjusted gross income (adjusted gross income increased by the amount of interest received or accrued which is exempt from tax) for the year over the amount of gross income specified in section 6012(a)(1).  (I could not locate the reference in the bill to section 6012, so this may be an IRS code reference.)  This tax cannot exceed the national average premium for the taxable year as determined by the Secretary of Health & Human Services, under a basic plan offered in the Health Insurance Exchange.  If an individual resides outside the US they must get coverage, as well as anyone residing in possessions of the US.

This tax shall not apply to any individual who is a non-resident alien.

Acceptable coverage is (a) Qualified health benefits plan, (b) Grandfathered health insurance coverage, coverage under grandfathered employment-based health plan, (c) Medicare Part A, (d) Medicaid, (e) Members of the armed forces and dependents, including Tricare, (f) VA, and (g) Other coverage recognized by the Secretary in coordination with the Commissioner.

There are requirements for anyone who provides acceptable coverage, including a return that contains the name, address and TIN of the primary insured and the name of each individual obtaining coverage under the policy, the period each individual was provided coverage, and other information the Secretary may require.  If the insurance is provided by a governmental unit or agency, then the officer or employee who enters into the agreement to provide the coverage shall make the returns.  There is a penalty for failure to file, which amends sections of the IRS code and without referring to that code you cannot tell what is being amended.

If an employer fails (during any period) to satisfy the health coverage participation requirements a tax of $100 is imposed for each day in the period until the failure is corrected.  If a civil penalty is imposed, then this tax will be reduced by the amount of the civil penalty.

If an employer elects not to provide health benefits, in addition to other taxes imposed, an excise tax equal to 8 percent of the wages paid by him with respect to employment (defined in another section) will be imposed.  Small employers will be charged varied percentages from 0-6 as long as the annual payroll does not exceed $400,000.

There are some clauses with regard to the Small Business Employee Health Coverage Credit, which will not allow credit to highly compensated employees – any employee paid over $80,000 a year.

A surcharge on high income individuals is also being imposed, in addition to any other taxes imposed.  This surcharge is a tax equal to 1 percent of the modified adjusted gross income that exceed $350,000 but under $500,000; 1.5 percent of income over $500,000 but under $1,000,000 and 5.4 percent of income that exceeds $1,000,000.

I am truly amazed as I continue to read through the bill how anyone could interpret this bill as one that would not increase medical costs, insurance premiums and taxes.  Each section only adds more responsibility to the government, which falls again upon the taxpayer.  This section alone creates a whole new welfare system intended to not only support people requesting assistance, but the bill actually calls for the government to recruit (by identification methods) people to in order to assist them, even when they have not asked for it!

Employers must offer health insurance to all employees, full and part-time, or face penalties, often for actions out of their control.  The pressure on employers could cause adverse consequences in the workplace.  Does the employer start basing hiring decisions on the likelihood that a candidate may or may not participate in the company offered insurance plan?  Will part-time employees now become less of an asset to employers since they too will require benefits?  How does this impact the job market and availability of jobs when the country already has high unemployment?  What appeared to be fairly straightforward (what was I thinking!) turned into many “what if “scenarios.  I’m sure you will develop your own.  If you have any questions regarding the bill, please contact your representatives.

This portion of the bill covers how individuals who cannot afford health insurance coverage or their portion of cost-sharing (co-pays, deductibles) will receive medical insurance and care.  Ultimately these costs have to be absorbed by someone.  The government is going to expand the medical welfare system and pay for premiums, as well as any out of pockets expenses for medical treatment, in the form of affordability credits.  Since it is a known fact that people who have insurance will use medical services more often, then one might expect an increase in medical treatment for newly insured individuals covered by the taxpayer – financed by increased premiums for those who can purchase insurance and higher taxes.

The bill will give eligible individuals affordability credits consisting of affordability premium credits to be applied toward the cost of insurance premiums purchased through the Health Insurance Exchange, and affordability cost-sharing credits to reduce the cost-sharing responsibility of these individuals.

Individuals can apply to the Commissioner for these credits through the Health Insurance Exchange.  The Commissioner can further deem individuals eligible on the basis on information otherwise obtained.  It doesn’t specify what information or how it will be obtain, but somehow the Commissioner is going to get information on individuals without their application or consent, to determine if they may also qualify for affordability credits.  The Commissioner must also establish effective methods that ensure individuals with limited English proficiency are able to apply for affordability credits.  Interpreted by many as a means of providing health insurance and related costs to illegal immigrants or amnesty immigrants – all at the taxpayers expense.

The Commissioner may also determine that a State Medicaid agency has the ability of determining eligibility for affordability premiums and credits, and if that agency does so they will be reimbursed for the costs in conducting those determinations.  So now the intrusion into our private lives is being expanded, not only to the Federal government,. but the state government; and guess who is paying the bill – the taxpayers.

If it is determined the individual is eligible for Medicaid, they will be enrolled under the State Medicaid plan.  No option.  I thought Medicare and Medicaid were already having financial problems, so now the government will add how many more to a failing system?

For the first two years of the plan the affordability premium credits may only be used for the basic plan.  But, beginning in year three the Commissioner will establish a process allowing affordability credits to be used to purchase enhanced or premium plans, but the individual is responsible for any difference in premiums.  So under this new plan we (the taxpayer) will be giving money in the form of affordability credits so these uninsured individuals can purchase a plan through the exchange.  If these individuals decide the basic plan just isn’t good enough for them, they can then use their own money to upgrade their plan to a better one – while the rest of us subsidizing these plans may only be able to afford the basic plan.  Excuse me, but if you can afford to upgrade your plan, then you can afford to pay for the basic plan out of your own pocket.  Why should taxpayers pay for these people to upgrade to a BMW when they are driving a Ford?

The bill describes an Affordable Credit Eligible Individual as one who is lawfully present in the US (other than as a nonimmigrant), enrolled under an Exchange-participating plan and not enrolled under another plan through an employer, with a family income below 400% of the Federal poverty level for the size of the family involved and who is not a Medicaid eligible individual.  So when Obama grants amnesty to 12 million illegal immigrants they then become eligible for all the benefits of this program covered by the taxpayers.

If you are a full-time employee and your employer offers employee coverage (for the employee and dependents) then you may not qualify as an affordable credit eligible individual.  Exceptions can be made in cases of divorce or separated individuals.  But, beginning in year two, if the cost in obtaining coverage under that employer-based plan exceeds 11 percent of your current family income, then that is considered unaffordable employer coverage.  This has the potential of expanding the current problem and government spending, resulting again in the increase in premiums and taxes.  If a family or individual currently has insurance and is paying for those premiums now, regardless of the cost, under this exception, those premiums could be determined as unaffordable employer coverage and then the government (taxpayer) would also subsidize this coverage!

The U.S. health care system is the best in the world, spurring advancements in new medical treatments and technologies.  Such innovation helps physicians treat and prevent diseases better than ever before, eradicates once fatal epidemics, and helps Americans lead longer, healthier lives.

Despite these advances, millions of Americans struggle to find affordable health insurance options.  From 1999 to 2008, the average cost of a family health plan increased by 119 percent from $5,791 to $12,680.  Meanwhile, workers’ wages increased 34 percent during the same nine-year period.  Ensuring access to quality, affordable health care is a laudable goal.  I support targeted solutions that lower health care costs and improve health care by building upon, not completely dismantling, our health care system.

Unfortunately, many of the proposals being considered in the U.S. Senate will make health insurance more expensive, jeopardize Arizonans’ current coverage, and expand the government’s control over health care.  While you will not find the words “ration,” “withhold coverage,” or “delay access to care” in the pending plans, that is what will result from the web of federally-dictated insurance reforms, new legal obligations, and provider reimbursement schemes that are part of them.  Such policies centralize the power of medical decisions with politicians and bureaucrats, not patients and doctors, and they will result in the delay or denial of care.

There are three main problems with the Majority party’s proposals: the implementation of a government-run insurance plan, the use of comparative effectiveness research, and spending.

Government-Run Insurance Plan:

First, the Majority’s proposals would create a new, government-run health insurance plan to compete against private insurance plans.  The argument is that a government-run plan would give consumers a better range of choices and make the health care market more competitive –”keep the insurance companies honest,” as the President put it.  However, well-respected, independent analysis provides evidence to the contrary.  For one thing, a government-run plan would be subsidized by the taxpayers, giving the government plan a huge advantage over competitors.  Yet, even government resources are not unlimited.  To save money after tens of millions of people are added to the public plan, the government would cut reimbursement to doctors and hospitals, exacerbating the difficulty Arizonans’ already encounter in trying to schedule doctor appointments.  To make up for low government reimbursements to providers, insurance companies would have to charge more for private insurance, making it less attractive than the government plan.

Over time, there will only be room for the government plan according to the respected Lewin Group, as 119 million Americans would lose their current coverage.  Remember, Fannie Mae and Freddie Mac were designed as independent “government-sponsored enterprises” to complement the private mortgage market.  Now, Fannie and Freddie account for a combined share of 73 percent of mortgage originations in the second half of 2008.  The two “government-sponsored enterprises” are now effectively owned and run by the federal government, after having sustained losses of over $100 billion last year alone.  A Washington-run health care plan will do to the health care market what Fannie and Freddie did to the housing market.

Comparative Effectiveness Research

Second, the Majority’s plan would create a new research entity to conduct so-called comparative effectiveness research (CER).  CER is a mechanism used by medical professionals to provide information on the relative strengths and weaknesses of various procedures and treatments.  In the hands of doctors, medical researchers, and other health professionals, CER can help patients and their own doctors make informed health care decisions.  However, in the hands of government, CER can become a tool to delay or deny care.  For example, the National Institute for Health and Clinical Effectiveness in Britain uses “cost-effectiveness research” to make health care decisions.  By basing treatment decisions on cost rather than need, Britain prescribes fewer cancer drugs than any of the other big five European nations; its patients therefore have the lowest survival rate according to a May edition of National Review.  The UK’s system provides only half of the care for end-stage renal disease patients that we do in the United States.  Obviously, such rationing of care is not something we should replicate in the United States.

It is telling that none of the Majority’s proposals in Congress would bar the federal government from using CER to deny access to care.  In fact, when I offered an amendment in April to explicitly bar the use of CER to ration care, it was defeated on a near party-line vote.  I have now introduced a free standing bill to ensure that any information obtained through CER cannot be used to deny access to care.  The Preserving Access to Targeted, Individualized, and Effective New Treatments and Service (PATIENTS) Act of 2009 (S. 1259) will protect the doctor-patient relationship and ensure access to the highest quality medical care.  I will fight at every opportunity to ensure that any health care reform plan the Senate considers later this year protects patients’ access to care.