House Health Care Bill Neither ‘Durable’ Nor ‘Desirable’ Says Former CBO Director

By Penny Starr | November 2, 2009 | 7:02 PM EST

( – Former Congressional Budget Office Director Douglas Holtz-Eakin said the House Democrats' health care overhaul is neither durable nor desirable because it would raise insurance premiums, ration care, and fail to bring down the cost of health care in America.
Speaking Monday on a conference call with reporters, Holtz-Eakin said that House Democrats had failed to draft a bill that would deliver meaningful health care reform without breaking the budget. House Democrats unveiled their 1,990-page health care bill last Thursday. President Obama called it a “critical milestone.”
Holtz-Eakin, however, said: “We are going to generally raise the cost of existing insurance to those who already have it – and that’s a majority of Americans – and then put in place a fiscally rickety way to get insurance to those who do not have insurance.”
“As a result I think that these are reforms which are not durable in any deep sense and are not desirable from the point of view of policy,” he said.
He further said that many of the tax provisions in the bill were not sustainable revenue measures but budgetary “gimmicks” designed to manipulate the CBO’s 10-year scoring process.
“It continues to be true that it does not ‘bend the cost curve,’” said Holtz-Eakin. “This does not deliver on the fundamental promise of real health care reform, which is to have services of the same quality or greater at lower cost, and lower cost growth certainly.”
Instead, the House bill employs budget “gimmicks” to hide its true cost and make the bill appear fiscally responsible while creating another federal entitlement program that Congress will not be able to pay for, he said.
“This sets up instead a large entitlement spending program that grows at 8 percent a year as far as the eye can see, and which [current] CBO Director Doug Elmendorf said earlier this year did not bend the cost curve,” said Holtz-Eakin. “It leaves the architects with only gimmicks to disguise this problem.”
Among those “gimmicks” is the front-loading of new taxes and the delaying of spending provisions, Holtz-Eakin said, both of which give the appearance of balance while concealing the real 10-year cost of the bill’s expensive insurance subsidies and entitlement expansions.
“It front-loads all of the taxes and back-loads all of the spending so as to give the appearance of balance over the 10-year window,” he explained.
One of the effort’s largest savings provisions, a reduction in Medicare payments rates, is “unrealistic,” Holtz-Eakin said, because Democrats made no substantive changes to the health care delivery system that would allow them to cut the rates at which the government pays doctors for providing care to seniors on Medicare.
“And I think it’s quite real that the Medicare payment reductions promised are politically and substantively unrealistic,” he said. “There’s been no change in the delivery system that would allow one to believe that you can cut in half the basic growth rate of the Medicare spending program, compared to history.”
Another of the bill’s payment mechanisms, a new tax supposedly focused on millionaires, is also unsustainable, Holtz-Eakin claimed, because it was not indexed for inflation, a fact that meant it could end up ensnaring millions of middle-class Americans whose businesses make them look like millionaires to the IRS.
“The House has a real clear pay-for in the tax on millionaires, half a million for single [filers] and a million for couples, but that tax is not indexed for inflation and, to my eye,” he said, “looks exactly like the Alternative Minimum Tax – a tax targeted on literally just over 100 high-income individuals but is now threatening the middle class year after year.”
Holtz-Eakin said that the House proposal committed to two great sins of public policy: creating an unfunded entitlement and enacting unsustainable tax policies to try to pay for it – mistakes that would make the reforms a detriment to economic recovery and growth.
“The heart of this bill is to repeat two of the greatest policy errors this country has made: to create large, unfunded entitlement spending programs, and to have a tax law that is not politically viable over the long haul,” he said.
“The budgetary aspect is crucial given the outlook for our economy, which we’re on track to triple debt over the next 10 years and run deficits of a trillion dollars as far as 10 years from now,” said Holtz-Eakin.