This Morning Bell is the final installment of a five-part week-long series on how Obamacare will affect you.

Lost in all of last weeks headlines on how the Senate Finance Committee (SFC) finally delivered a health care product that the Congressional Budget Office (CBO) was willing to say would reduce the deficit, was how exactly they achieved it. At a price tag of $829 billion, the SFC ’framework’ will reduce the number of uninsured Americans by 29 million, moving the overall percentage of nonelderly Americans with health insurance from 83% in 2010 to 94% in 2019. But of those 29 million with new insurance coverage, almost half (14 million), will get their coverage through the welfare programs Medicaid and the State Children’s Health Insurance Program (SCHIP). That is equivalent to adding every resident of Ohio and Nevada to the welfare rolls.

In other words, for half of those Americans who are being promised health reform, they are going to be stunned to find themselves in a welfare office applying for Medicaid. Under the current baselines for Medicaid and the State Children’s Health Insurance Program (SCHIP), there will be 76 million individuals served by these programs for at least some part of the year in 2019. If the SFC proposal becomes law, the number on Medicaid/SCHIP will top 90 million. So why do Obamacare supporters want to put 90 million Americans on the welfare rolls? It is cheaper than providing them with real quality health care.

Medicaid was originally created to provide access to health care for families on welfare. Medicaid pays providers 20-25 percent less than does the private sector, forcing doctors and hospitals to subsidize Medicaid through lower rates. This deters doctors and hospitals from participating in the program, creating a lack of access that itself is a form of rationing. As Time magazine reported this July: “But there are real questions as to whether the program could handle the strain of that many new clients. Already, it is difficult in some areas to find health-care providers who are willing to accept Medicaid patients.”

Even those who are not pushed into welfare will feel the strain on the health care system. The majority of individuals moved into Medicaid will be young and healthy. Keeping them on welfare rolls will shift even more costs to individuals and families buying private health insurance, as doctors and hospitals recoup their losses from Medicare/SCHIP by charging more to the privately insured. In effect, the congressional policy seems to be to expand dependency by discriminating against individuals based on their income.

And then there is the effect on states. The CBO estimates that the Finance Committee plan will cost states $33 billion over 10 years. But even that may be a low estimate. Governor Phil Bredesen (D-TN) has warned that the costs for his state alone could be as high as $3 billion. Thanks to strings attached to Obama’s failed stimulus, states already are facing an erosion of their authority to manage their Medicaid programs. The true cost to taxpayers in the states will only become apparent as spending for education, child welfare, public health, and investment in transportation systems and infrastructure are crowded out over time.

As Heritage Senior Fellow Dennis Smith reminds us:

In June, President Obama told Senate Democrats, “As we move forward on health care reform, it is not sufficient for us simply to add more people to Medicare or Medicaid.” Unfortunately, that is precisely what Congress is going to do with the Baucus proposal.

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This Morning Bell is the second in a five-part week-long series (readMonday’s on out-of-pocket costs) on how Obamacare will affect you.

“I will not sign a plan that adds one dime to our deficits – either now or in the future. Period.” President Barack Obama promised this to the American people in his health care addressbefore a Joint Session of Congress on September 9th. Problem is, no one believes him.

The Congressional Budget Office has issued reports on the Senate Health Committee bill (HELP), the House Tri-Committee Bill (HR 3200), and the Senate Finance Committee bill (Baucus bill). According to the CBO, the HELP bill would add $600 billion to the deficit in just the first ten years, HR 3200 would add $239 billion to the deficit in just the first ten years, and the Baucus bill claims to reduce the deficit by $81 billion.

But nobody believes that the Baucus bill will accomplish what it claims to do. As theWashington Post reported:

The cost difference stems from the fact that the House measure is honest enough to include the full 10-year cost of the so-called “doc fix” — $245 billion to reverse scheduled cuts in Medicare payments to physicians — although not fiscally responsible enough to pay for it. The Senate just patches the problem for one year and pretends that doctors take a 25 percent cut in reimbursements the following year and then stay at that low level forever. No one believes that will happen, so the money is going to have to be scrounged up later or else add more to the deficit.

The Washington Post is right: claims that the Baucus bill reduces the deficit are a complete fraud since there is simply no way Congress is going to cut doctor pay by 25% in one year. But all of these bills are deeply dishonest about their true costs in a more fundamental way.

Look at these charts on spending levels in the HR 3200 and the Baucus bill over time. Notice how in both bills the increased revenues (a.k.a. tax hikes) take place immediately but the increased spending doesn’t really ramp up until 2013. In other words, in order to game the CBO scoring system (explained by former CBO Director Donald Marron here), Democrats have packed ten years of taxing, but only six years of spending, into the CBO’s ten-year budgeting window.

So what happens to the deficit in those years after the CBO budget window? Rep. Jason Altmire (D-PA), a member of the Democratic Blue Dog Coalition explains: “Every year, you lose ground. It’s likely after 10 years, we fall off a cliff.”

Falling off a cliff. That is the verdict from members of his own party on what Obamacare will actually do to the federal deficit.

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Quoted from http://blog.heritage.org/2009/09/29/morning-bell-what-the-baucus-bill-will-cost-you/:

Morning Bell: What The Baucus Bill Will Cost You

The Foundry - September 29th, 2009

This morning the Senate Finance Committee will resume their markup of Chairman Max Baucus (D-MT) health care bill. Thanks to Sens. Chuck Schumer (D-NY) and Jay Rockefeller (D-WV) the focus today will be on whether or not the Democrats on the committee can find enough votes to include a government-run insurance program. Just like Speaker Nancy Pelosi’s (D-CA) preferred public plan, Rockefeller’s plan would set price controls for health reimbursements at 5% above Medicare reimbursement rates. If the public plan was opened to all individuals and families, 103.4 million Americans would end up on the public plan, 88.1 million of whom would first lose their existing private coverage.

It is unclear at this point if centrist Democrats in Congress are really ready to force this many people out of their existing private care and into government-run health care. But even if the public option is not included, there are still plenty of regressive job killing taxes and invasions of privacy in the Baucus plan that makes it terrible public policy:

Taxes Families – Under the plan, everyone will have to have health insurance by 2013. The mandate will apply to all adults and their dependents under age 18. Those who failed to buy insurance would be forced to pay an annual tax between $750 and $3,800 per year. Those who fail to pay the tax could be jailed for up to one year. Worse, 7.7 million households would face a 35% excise tax on their health insurance. 94% of these households would be paying a higher tax rate on their health insurance than they would be paying on their income.

Taxes Businesses – Employers with more than 50 employees that don’t offer health coverage would have to pay a penalty for each employee who qualifies for new federal subsidizes under the bill. To stay in business employers will be forced to cut jobs and cut wages.

Taxes the Sick – The Baucus bill imposes higher taxes on manufacturers and importers of medical devices, health insurance companies, clinical laboratories, manufacturers and importers of drugs. In effect, the Baucus proposal would tax the sick to subsidize insurance for the healthy, and many of the taxes would be imposed on the same people “helped” by the subsidies.

Invades Your Privacy – The Baucus bill enforces both its individual and employer mandates by deputizing the Internal Revenue Service. To enforce these provisions, the bill would therefore require individuals, health insurers, employers, and government health agencies to report detailed health insurance information on all Americans to the IRS, adding significant administrative costs and reducing privacy protections. The IRS would also be required to report personal income data to state exchanges, insurance companies, and employers because premium credits and out-of-pocket limits would depend on income.

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