Higher Premiums, Higher Taxes: Top 10 Ways Senate Democrat Bills Would Drive Up Health Care Costs

Washington, D.C. – In a speech on the Senate floor today, U.S. Senator Mike Enzi(R-Wyo.) highlighted 10 provisions in the Senate Democrats’ health care bills that would driveup health care costs for American families.

“This health plan being forced on Americans under phony tight deadlines bites off toomuch, fails to deliver on promises and passes the costs onto hardworking Americans,” Enzisaid. “The combination of increased taxes, expensive mandates and new regulations inthese bills will actually increase the cost of health care for most Americans.”

“We need to enact reforms that will actually reduce costs and make health insurancemore affordable. That is what the American people want, but unfortunately, that is not whatthe current bills actually do.”

A video of Enzi’s speech will be available at www.enzi.senate.gov.

Top 10 ways the Senate Democrats’ bills would drive up health insurance costs:

1. Requires young people to pay higher premiums – Studies show the restrictive newrating rules would increase premiums for young people by 69 percent.2. Forces everyone to purchase costly plans – Requiring everyone to purchaseexpensive health care plans with high premiums – and not allowing people to chooseaffordable options that meet their budgets and needs – would increase premiums for newindividual purchasers by nearly 10 percent.3. Piles on federal mandates – Forcing everyone to purchase a plan that covers a laundrylist of benefits, regardless of what they want or need, would inevitably drive up everyone’scosts.4. Taxes medical devices – Nonpartisan experts at the Congressional Budget Office (CBO)have concluded that new excise taxes on medical devices would be passed onto patients,increasing premiums and increasing prices on everything from wheelchairs topacemakers.5. Taxes drugs – Patients would pay for these taxes too, in the form of higher prices on lifesavingprescription drugs and higher premiums.6. Taxes insurance providers –CBO says new taxes on insurance providers would bepassed onto patients in the form of higher premiums, as much as $487 per year forfamilies.7. Expands Medicaid and shifts costs – The bills would force 14 million Americans intothe flawed Medicaid program, which four in 10 doctors won’t accept because the programunderpays providers. Studies show that expanding the program directly increases costsfor everyone else, since doctors and hospitals must make up for their losses underMedicaid by shifting costs to other patients.8. Taxes “Cadillac” and union plans – The new 40 percent tax on high-end “Cadillac”plans would force companies to shift costs to employees or to reduce the value of thehealth care benefits they provide.9. Charges fee to sell plans in the mandated exchanges – CBO estimates that thesurcharges to sell plans in the new exchanges would increase premiums byapproximately three percent.10. Imposes a new tax to pay for comparative effectiveness research – The bill would taxpatients to pay for new research so that Washington bureaucrats can decide whichtreatments patients can and cannot receive.

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Senator Michael B. EnziFloor Statement as Prepared for Delivery

Ten Ways that the Current Health Care Bill Will Increase Premiums for AmericansOctober 27, 2009

Mr. President, this health plan being forced on Americans under phony tight deadlines bitesoff too much, fails to deliver on promises and passes the costs onto hardworking Americans.When the 85 percent of Americans who already have health insurance hear the term “healthcare reform”, they expect Washington to do something that lowers the cost of their healthinsurance premiums. That reaction should not be surprising, since the President and otherCongressional leaders have explicitly promised that reform would lower health care costs forthe average American family.

Unfortunately, the bills that Congress has developed will do the exact opposite. These billswill actually INCREASE health care costs.

Several recent reports have highlighted what I and some of my colleagues having beensaying for months. The combination of increased taxes, expensive mandates and newregulations in these bills will actually increase the cost of health care for most Americans.Unemployment is higher than it’s been in decades, the housing market is in distress, there’san out-of-control federal debt and deficit—more and more middle class Americans are feelingsqueezed by irresponsible decisions being made here in Washington. Unfortunately, thehealth care bill being put together by the Majority Leader is another example of irresponsiblepolicies.

It is important for the American people to understand how these bills will actually increasehealth care costs. I would like to highlight ten specific ways these bills will increasepremiums for American families and individuals. Taken together, these provisions willincrease costs, stifle competition and take choices away from families, individual Americansand small businesses.

Here are the top ten ways the bills before Congress increase health care costs.One: The two Committee bills rely on taxing the young to pay for the old in what the numbercrunchers call “adjusted community rating”. This means that the premium charged to ahealthy 22 year old will have to increase, to be much closer to the premiums charged tosomeone who is much older and sicker. This means young people will pay a lot more forhealth insurance premiums than they do today.

Over 40 percent of the uninsured are between the ages of 18 to 34, the same age group thatwill be hit with the hardest, with the highest price increases if this bill passes. Expertsestimate that in most states, premiums for the youngest 30 percent of the population willincrease by 69 percent under the tight age bands being considered in one of the Senatebills. These extreme price increases will force the young and healthy people out of themarket. Most young people will probably do the math and decide to pay the new $750 a yeartax penalty rather than pay $5000 a year (or more) for health insurance. If they get sick later,they can always enroll in health insurance later.

Two: premiums will increase because of the new federally mandated requirements on healthplans. The bill will mandate that most health plans have to meet new, higher specifiedactuarial values. If you don’t know the term “actuarial value”, you are not alone. Let me putthis simply. Actuarial value is a technical term that describes the amount of total healthspending that is paid for by the health plan – in other words all of the benefits, and enrolleecost-sharing provisions that a health plan covers. Typically, as actuarial values increase,premiums increase, and cost-sharing requirements decrease. If you’re healthy you can’t optfor lower premiums or pay a higher co-pay that your government tells you, or you’ll pay thepenalty.

The bottom line is that experts estimate 50 percent of the individual market policiespurchased today and about 20 percent of the policies purchased by small businesses todayhave actuarial values that are lower than what the Democrats think you should have, whichmeans millions of Americans will be forced to buy more expensive plans. Compliance withthese benefit requirements could cause premiums for new purchasers to increase by about10 percent for individuals and about three percent for small businesses. And for smallbusiness three percent is a high rate of profit.

Three: premiums will increase because of the new federally mandated benefit packages. Allplans must include a long list of benefits, regardless of what Americans need or want. Whyshould a 30-year-old single man be required to pay for ovarian cancer screening?Additionally, at least every year, the Secretary of Health and Human Services would berequired to define and update, perhaps increase, the categories of covered treatments, items,and services.

Not surprisingly, what this will mean is that the list of mandated benefits will inevitably getlonger and further increase costs. If these bills are enacted, every disease advocacy group,drug manufacturer and health care provider will hire more lobbyists to see that all healthplans are required to cover their unique diseases, treatments and procedures.That is no way to run a health care program. I believe that consumers, rather than lobbyists,should decide the benefits package that best meets their needs. Otherwise, you’ll have moremandates and higher costs.

If this bill becomes law, I wouldn’t be surprised if every plan in America is required to covermassages and acupuncture. I’m not saying people shouldn’t be able to get massages oracupuncture, if they want to pay for them, but I don’t think all Americans should be required toenroll in plan that covers every single benefit.

Four: premiums will increase because of the new excise taxes on medical devices anddrugs. The official scorekeepers at the Congressional Budget Office and the Joint Committeeon Taxation have been clear in stating that these taxes will be passed onto patients. Thatmeans that consumers will see the prices of everything from power wheelchairs topacemakers to prescription drugs like Prilosec significantly increase. These price increaseswill also ultimately also increase health insurance premiums for the millions of Americanswho already have health insurance. You don’t use those? Remember insurance isspreading the risk, so you get to pay too.

Five: premiums will increase because of the new excise tax on health insurance providers.Congressional Budget Office and the Joint Committee on Taxation have said these taxes willbe passed onto you in the form of higher premiums. This tax alone could raise premiums forfamilies by $487 a year.

Six: premiums for health insurance will increase when 14 million more Americans areenrolled into the Medicaid program. Several studies have highlighted how Medicaid’sinadequate payments to doctors and hospitals directly increase costs for everyone else, byforcing these providers to make up for their losses under Medicaid by shifting these costsonto private purchasers.

The current health reform bills include the biggest expansions of the Medicaid program sinceit was created in 1965, while doing nothing to address Medicaid’s inadequate doctor andhospital payment rates. This will mean that billions of dollars in additional costs will have toget shifted onto individuals who already have health insurance, thereby driving up theirpremiums. Nearly 40 percent of doctors won’t see Medicaid patients because of the lowreimbursement rates. If you can’t see a doctor, you don’t have health care.

Seven: premiums will increase for so-called “Cadillac plans” because of the new 40 percentexcise tax. Companies will respond to this new tax by shifting the costs on to you who arethe insured or by reducing the value of the health care benefits they provide. Eventually thistax will start hitting Chevys and Buicks—not just Cadillac’s. Experts estimate that in manymetropolitan areas, the lowest option “bronze” plan under the Finance Committee bill wouldbe considered a so- called Cadillac plan as early as 2016.

Eight: premiums will increase because of the new fee to sell plans in the mandatedexchanges. The Congressional Budget Office estimates plans would have to pay asurcharge to sell in the exchange, which would add about 3 percent to premiums.Nine: premiums will increase because of the new reinsurance program. This new programwill cost Americans $20 billion, and those costs will be passed onto someone, most like thehealthy enrollees.

Ten: premiums will increase because of the new tax for comparative effectiveness research.Washington bureaucrats would tax patients so the government can decide which treatmentsare acceptable and which treatments are denied. We’ve seen this story before in othercountries such as England. We know that this will lead to the delay and denial of care for ourseniors. It’s no wonder that a recent Rasmussen poll noted that 59% of our nation’s seniorsoppose the current legislation.

Taken together, the ten policies I just described will cumulatively increase health insurancepremiums for millions of Americans who currently have health insurance. It is anothersqueeze on our nation’s middle class. In my home State of Wyoming, a healthy, 35 year oldman can currently buy a high deductible policy for about $90 a month. The scorekeepers atthe Congressional Budget Office estimate the silver plan under the Finance Committee billwill be $392 a month. That is over a 300 percent increase! None of the folks I have talked tofrom Wyoming can afford to pay 300 percent more for their health insurance. In anothereconomic time this policy would be bad enough, in today’s climate it is irresponsible.

We all agree the health insurance market is broken and needs to be fixed. Everyone thatwants health insurance should be able to get it, and they shouldn’t have to spend their hardearnedsavings to get it.

No American should be denied health insurance because they have cancer, diabetes, acne,or some other pre-existing condition. No one should lose their health insurance because theyforgot about an old injury when they filled out a form. No one should be denied healthinsurance, period.

These reforms are very important and long over-due. However, we can do better. Thesegoals should be implemented in a way that drives down costs for the majority of Americanswho already have health insurance. Congress needs to learn from the experiences of thestates that have already enacted these types of reforms. The states didn’t pass reforms withthe goal of increasing costs for a majority of their residents, but that is precisely what hashappened over time.

Mr. President, We need to enact reforms that will actually reduce costs and make healthinsurance more affordable. That is what the American people want, but unfortunately, that isnot what the current bills actually do.

I yield the floor.

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