Commentary

Health Reform Costs Government Plenty, but You Even More

Sen. Jim Webb is not sticking to his guns.

In October, along with a few of his Democratic colleagues, Webb wrote to Senate Majority Leader Harry Reid (D-Nev.) that it was Webb’s “duty” to ensure that the debate over Reid’s health care legislation would be open and transparent.

Webb told Reid that the Senate should neither take up the health care legislation, nor vote on any amendments, without “complete” cost estimates from the nonpartisan Congressional Budget Office.

Legislative action should stop — right now — until the CBO produces cost estimates of those hidden taxes.”

Reid has honored neither request, and Webb hasn’t said boo about it. In fact, Webb even cast the deciding vote that let the Senate take up Reid’s bill.

Webb was right to insist on a complete cost estimate. Ever since House Democrats introduced the first rendering of President Obama’s health plan on June 19, Congress has been debating numerous iterations without ever laying eyes on a complete “score.”

The CBO has produced several preliminary cost estimates, which have generally found that the bills would trigger $1 trillion of new federal spending over the next 10 years. Yet those cost estimates are incomplete, because they do not include the cost of the legislation’s private-sector mandates.

One way to hide the full cost of legislation is by pushing costs off the federal budget and onto state governments and the private sector. For example, the Reid bill would require states to spend an additional $25 billion over the next 10 years.

The Reid bill also includes private-sector mandates, in that it would require individuals and employers to purchase health insurance, whether they want it or not. In the projections that CBO has so far produced, however, you will find no estimate of the costs that those mandates — which are really hidden taxes — would impose on the citizenry.

Federal law requires only that the CBO say whether the private-sector mandates’ cost would exceed a specified threshold, now set at $139 million. The agency has affirmed that the Reid bill’s mandates would “greatly exceed” that threshold.

That is quite an understatement — the mandates could exceed that threshold by a factor of 10,000.

The Clinton administration’s health plan contained similar mandates. Not only did the CBO estimate their cost, the agency even treated the mandatory premiums as federal revenues and included them in the federal budget, just like other taxes. Those taxes accounted for 60 percent of the total cost of the Clinton plan.

In 2006, Massachusetts enacted legislation substantially similar to the Obama health plan. Estimates from the Massachusetts Taxpayers Foundation indicate that those hidden taxes likewise account for 60 percent of the total cost of the Massachusetts law.

This time around, however, congressional Democrats appear to have crafted their private-sector mandates so as to avoid the CBO’s criteria for inclusion in the federal budget. That is their right. But the result is perverse. If a bill would require taxpayers to send $1 trillion to the IRS, the CBO must include that in its cost estimate. But if a bill would also require Americans to send $1.5 trillion to private insurance companies, the CBO neither reports nor even tallies that tax. Without a cost estimate of those hidden taxes, the Senate may approve a $2.5 trillion bill while telling the voters that it costs $1 trillion.

Congress has been debating the Obama health plan for 177 days now without a complete cost estimate. The House has approved its version and, thanks to Webb, the full Senate has begun debate on its own.

Legislative action should stop — right now — until the CBO produces cost estimates of those hidden taxes. Webb should insist on no less. For that matter, so should his colleague, Mark Warner, Virginia’s other Democratic U.S. senator.

Reid may fear that revealing the full tax burden would turn people against his legislation.

Columnist Ezra Klein has reported that when the CBO revealed that the Clinton plan was far more costly than Clinton had claimed, “it helped kill the bill.” But that’s democracy. If Harry Reid fears truth, he should have written a better bill.

The American people deserve all the facts — especially when it comes, as Webb and his cosigners put it, to “one of the most monumental and far-reaching undertakings considered by this body in decades.”

Michael F. Cannon is director of health policy studies at the Cato Institute and co-author of Healthy Competition: What’s Holding Back Health Care and How to Free It.