The greatest opportunity offered by real health-care reform is lower costs facing Americans. At the outset of the health-care debate, members of Congress in both parties, as well as President Barack Obama, held out this promise. Unfortunately, after several months of attempted negotiations and a highly partisan prime-time speech by the president, genuine bipartisan reform has thus far failed. When it became apparent that health-care reform was going to raise the burden on American families, not lower it, I ceased participating in the Senate negotiations.
Finance Committee Chairman Max Baucus has now put forth an $856 billion partisan proposal that he continues to hope will attract at least a modicum of Republican support. So far, no takers. Why? It is not surprising, given that even Ron Wyden, a Democratic member of the committee, has acknowledged that its expensive mandate would be "a real hit on middle-class families."
Baucus' bill also includes a panoply of taxes and fees to fund the expansive new programs. These are even more bad news for middle-income earners, with direct taxes and indirect penalties, fees and higher costs.
Let's start with the taxes. The Baucus bill declares war on savings accounts for health care. For example, the bill would limit the amount that employees can set aside of their own money into flexible spending accounts. In addition, over-the-counter medicine would no longer be qualified expenses for those accounts and health savings accounts, unless you have a doctor's note. Lastly, the proposal includes an increase from 10 percent to 20 percent for the penalty for withdrawals that are not used for qualified medical expenses. All together, this means that employees could be facing a 55 percent federal tax on a bottle of aspirin. This year, 35 million employees participate in employer-sponsored, employee-funded flexible spending accounts. They provide relief for the ever-increasing amount of health care that families must pay out of their own pockets. How does cutting back on flexible-spending-account benefits lower the costs of health care?
Even worse are the hidden, indirect levies in the Baucus bill. The most troubling are unprecedented excise taxes hitting broad swaths of the health-care industry — pharmaceuticals, medical devices and health-insurance providers. While the corporations would send the checks to the IRS, we know that the real pain will be passed to consumers in the form of higher insurance premiums, higher prices, lower pay and even some layoffs. Rather than cost-saving reforms, this plan means higher costs for everything from hospital beds to hearing aids, creating one more unfair burden on middle-income families seeking affordable heath care. Finally, if you decide to either not have health insurance or if you need a more expensive plan than is allowed, the Baucus plan will raise taxes on the affluent and poor alike. The so-called individual mandate requires everyone to obtain health-care coverage or pay an extra tax. If you don't, and you are making, say, $66,000, the tax is $1,900 per year. Some may say this is simply a penalty for not doing what Uncle Sam wants you to do, but let's face it — it's nothing more than a new tax.
We are all for real health-care reform. But Obama and his party in Congress are asking us to make things harder, not easier, for middle-income taxpayers. At a time when we have trillion-dollar-plus deficits and an unemployment rate reaching double digits, this is a colossal mistake I cannot support.
Orrin Hatch, a Republican, is Utah's senior U.S. senator.
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