Congress Squabbles Over Health Reform Cost Estimates

by Leroy Baker, Tax-News.com, New York

22 July 2009

As the US healthcare reform debate rages on, Congressional Democrats are claiming that proposed legislation which seeks to lower the cost healthcare and expand coverage with the help of an income surtax will be 'deficit neutral' over the following decade. Naturally, Republicans contend that the bill will be anything but.

According to senior Democrats on the House Ways and Means Committee, Congressional Budget Office estimates released on July 18 show that the America’s Affordable Health Choices Act, approved by the Committee on the previous day, is deficit neutral over the 10-year budget window. Indeed, it is claimed that the legislation will and even produce a USD6bn surplus.

With net Medicare and Medicaid savings of USD465bn offset by revenue provisions totalling USD583bn, the committee says that the health bill will “fully finance” the previously estimated USD1.04 trillion cost of reform, which aims to provide affordable health care coverage for 97% of Americans.

“This fulfills the strong commitment of the President and House leadership to enact health reform on a deficit-neutral basis,” said Henry A. Waxman, House House Energy and Commerce Committee Chairman, Charles Rangel, House Ways and Means Committee Chairman and George Miller, House Education and Labor Committee Chairman, in a joint statement. “The reforms included in this legislation will help control health care costs and expand access to quality, affordable coverage to all Americans in a fiscally-responsible manner.”

Citing the same CBO figures however, Republicans on the Ways and Means Committee contend that the health reform legislation will actually increase the federal deficit by USD239bn. “The deficit would begin to skyrocket in just five short years under the Democrat bill despite USD820bn in new taxes to be paid for by individuals small businesses and manufacturers,” argued a statement issued by committee ranking Republican Dave Camp.

The legislation contains proposals for a controversial surtax to help subsidize more affordable healthcare, starting at 1% for single taxpayers earning USD280,000 or more per year (USD350,000 for married couples), rising to 5.4% for singles earning more than USD800,000 annually (USD1m for couples). But Camp calculates that taxes will effectively rise for some taxpayers making as little as USD10,000 per year.

“The House Democrats’ bill does nothing to reduce costs. In fact, it will increase costs, increase taxes and start to increase the size of the federal deficit in just five years,” Camp stated.

“This is not a bill that should be slammed through Congress. It will affect every man, woman and child in this country, and we need to debate it thoroughly, thoughtfully and without artificial deadlines,” he cautioned.

“Health care reform has to happen,” said Camp added. “But simply spending one to two trillion dollars more on health care and raising massive amounts of new taxes to pay for it is not a pill we should swallow. There is a right way to reform health care and it doesn’t require Americans to choose between their job and affordable health care.”

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