Johanns Sheds Light on Real Cost of Health Care Proposal Before the Senate

Below are remarks as prepared for delivery by Senator Mike Johanns regarding the cost of the health care legislation being proposed by the Senate Finance Committee. In his speech on the Senate floor this morning, Johanns will highlight the hidden costs and taxes within the legislation.

Highlights of the Speech as Prepared for Delivery:

"Both Republicans and Democrats should be able to agree that we should accomplish true health care reform in this country in a fiscally responsible way ... Americans believed the President when he said he wanted an open and transparent process. Unfortunately, what they got is not transparent and is based on false assumptions."

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"While the Congressional Budget Office has scored this bill at $774 billion, the real cost of this bill is closer to $1.67 trillion over a full ten years. What its supporters neglect to tell you is that the main spending provisions in this proposal do not go into effect until 2013. That's right. The American public will wait four years before most of these new initiatives even get off the ground."

...

"The American people have asked us to be transparent and deliberate as we address health care reform. That means, they want us to read the bill before we vote on it and have a full picture of how this will affect our budget deficits and fiscal outlook. The American people want to know how this proposal will impact them and what it will do to the current health care system and their health care premiums. Basically, they want us to know all the details before we completely overhaul one-sixth of our economy. That means that we need to have time to read the bill and that we need a budgetary analysis in front of us before we vote."


Remarks as Prepared for Delivery by Senator Mike Johanns Regarding the True Cost of Health Care Reform:

"Mr. President, I rise today to shine a light on the budgetary gimmicks and omissions in the Finance Committee health care proposal. Both Republicans and Democrats should be able to agree that we should accomplish true health care reform in this country in a fiscally responsible way. The message clearly conveyed to me by Nebraskans in August, was that they wanted honesty and full transparency as we attempt to achieve health reforms.

"Americans believed the President when he said he wanted an open and transparent process. Unfortunately, what they got is not transparent and is based on false assumptions. I mean honestly, an American family would have to hire a whole team of accountants to understand some of the smoke and mirrors hidden in the Finance Committee draft.

"While the Congressional Budget Office has scored this bill at $774 billion, the real cost of this bill is closer to $1.67 trillion over a full ten years. What its supporters neglect to tell you is that the main spending provisions in this proposal do not go into effect until 2013. That's right. The American public will wait four years before most of these new initiatives even get off the ground.

"So, none of us should be surprised when the American people laugh at an arbitrary deadline of the end of this week for finalizing Committee action. The proponents claim it's such a crisis that we should rush through, yet their fixes don't take effect for four years?

"You can understand the American public's frustration...They must watch the evening news, look at that Capitol dome and ask ‘exactly what kind of operation are they running.' They've got to be scratching their heads in amazement...If they ran their business or household budgets this way; they'd have been bankrupt long ago.

"If that weren't enough to fill an entire gymnasium full of town hall participants, there is more, unfortunately much more. The proposal requires new taxes on medical device manufacturers, health insurance premiums, and pharmaceutical manufacturers, topped off with additional Medicare cuts and unfunded mandates on states. Let me translate this-higher taxes will be passed to the American people. All these taxes, fees, and mandates will only increase the cost of health care, not decrease it, when these taxes are passed onto consumers.

"While the promised benefits don't kick-in until year four, the taxes and fees start from almost day one. In effect, the bill is structured to impose ten years and $848 billion worth of new taxes and fees and only pay for 6 years of benefits. This creative accounting unfortunately only appears to get cheers here inside-the-beltway. Yet, the average American thinks we don't have a clue.

"Another hidden cost is the new mandate on States through an expansion of Medicaid coverage. Partial costs to expand the Medicaid program up to 133 percent of the poverty limit will be forced upon the States. This unfunded mandate will cost States over $42 billion, which is not disclosed in the cost estimate. Who will pay for this cost? Obviously, once again, it will fall on the American people.

"In Nebraska, we only have two ways to find that kind of money-cut programs or raise taxes. If we cut programs, things like education, senior initiatives, infrastructure projects, prisons, and other valuable programs could find their budgets destroyed. In these times of tight budgets, states have already slashed their budgets down to the bone and piling on another layer of spending is not the answer. The other alternative to raise taxes doesn't seem to be a very popular option either. However, this legislation seems to make this choice all but inevitable.

"Folks in Nebraska are going to resent seeing their state taxes raised because the federal government has put them in this fiscal straight jacket. In addition, one of the main pay-fors in this legislation is $400 billion in cuts to the Medicare program. Despite the fact that the Medicare Trustees Report projects that Medicare will be bankrupt by 2017, none of the $400 billion goes toward shoring up our already pending fiscal crisis within Medicare. The false promise being made by Congress is that we can both fund this new entitlement with Medicare money and keep our commitments to our Senior Citizens.

"I'm not naïve enough to buy this bag of goods, and neither are our seniors. We're asking them to choose the prize behind curtain number 2, when they already know it's a goat. I am deeply concerned that we are compounding the problem by not re-investing these dollars back into Medicare. That's why I hope the Finance Committee members see the light today and adopt important amendments by the Junior Senators from Kansas and Nevada to help shore up Medicare and not legislate decreased benefits for our seniors. Even the non-partisan Congressional Budget Office Director admitted yesterday that these cuts to Medicare will decrease current insurance benefits that our seniors now enjoy.

"Finally, this Finance Committee proposal is built on false assumptions when it comes to cost containment measures. This bill is based upon the fantasy-land assumption that scheduled sometimes double-digit payment cuts to various medical professionals will be allowed to take place. However, the history of Congress speaks for itself, as Congress has repeatedly overridden scheduled cuts to these providers year after year after year.

"Any Senator who votes for this Finance Committee proposal should be required to publicly state their support for the 25 percent cut in physician reimbursement rates beginning in two years. Their proposals credits themselves free money by assuming these savings. Yet, they know Congress waives the Budget Act, waives PAY-GO, and suspends these cuts year-in and year-out, with their support, I might add.

"In fact, the Congressional Budget Office states quote,
‘These projections assume that the proposals are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation. For example, the sustainable growth rate (SGR) mechanism governing Medicare's payments to physicians has frequently been modified to avoid reductions in those payments.'

"Therefore, I'm not going to count on Congress acting any differently in the near future with taxpayer money. And any cost estimate that assumes otherwise is simply not based in reality. We all know what they say about good intentions, but I still believe that you don't spend money until it is actually in your pocket. The American public deserves an honest and transparent discussion about our current and future actions and how they will likely lead to a health care system built on a ‘house of cards'.

"The American people have asked us to be transparent and deliberate as we address health care reform. That means, they want us to read the bill before we vote on it and have a full picture of how this will affect our budget deficits and fiscal outlook. The American people want to know how this proposal will impact them and what it will do to the current health care system and their health care premiums. Basically, they want us to know all the details before we completely overhaul one-sixth of our economy. That means that we need to have time to read the bill and that we need a budgetary analysis in front of us before we vote.

"However, here is what our constituents see -
• A one-thousand-plus page bill from one Senate Committee
• A Senate Finance Committee with no legislative language, only a concept paper.
• A plan to consider almost 500 amendments in Committee just this week
• A plan to jam both of these behemoths together into one bill over the weekend
• A plan to ask the Congressional Budget Office to whip up a budgetary analysis almost overnight, even though CBO said yesterday they will need two weeks.
• And bring it all to the floor as early as next Tuesday.

"It's not hard to see why frustration was so evident in our town hall meetings throughout August. This kind of action is not keeping the faith with the American people. We need to earn back the trust of the American people, and actions like I just described would destroy that effort. I would encourage my colleagues on the other side to slow down and give us time to fully examine the effects of this proposal."