The ChamberPost

Myth and Fact: Organizing for America Misinformation on Health Care Bill

by James Gelfand

On March 10th David Plouffe, President Obama's former campaign manager and current White House advisor, sent out an email with a set of facts on behalf of Organizing for America about the "President’s Proposal" for health reform – which is, in actuality, a proposal for the House to pass the same bill that the Senate passed on Christmas Eve, and then for the Senate to pass a "fixer" bill using the nuclear option, budget reconciliation, with 51 votes. The email (and this page) contain a number of claims about this proposal, many of which are questionable at best. Below is our analysis:

Organizing for America Claim: "If you have health insurance through your employer and like your plan, you can keep it."

Fact Check: False

Explanation: This was debatably true in the Senate bill, but the President’s own proposal document lays out on page 3 why this is false in the section labeled "Extend Consumer Protections against Health Insurer Practices." The proposal would effectively end the ability to "grandfather" plans and keep them in operation after the bill is enacted, instead forcing an exhaustive and onerous list of new mandates on all plans, including employer and "grandfathered" plans. These include forcing all plans to cover "children" up to the age of 26, prohibiting rescissions (withdrawing coverage when customers mislead an insurer on their enrollment forms), mandating a new appeals process, mandatory state and federal annual rate reviews, banning annual and lifetime limits, banning all pre-existing condition exclusions, banning plan differences for highly compensated employees, and forcing all plans to cover government-designatedpreventative services with no cost-sharing. While most group health plans do not practice rescissions or have preexisting condition exclusions, the new government mandates will lead to reduced plan flexibility and higher costs. All of these policies will increase the costs of a plan, and while some of these changes may have merit, it is undeniable that forcing these changes will cause many plans to change, and some to cease operation.

Organizing for America Claim: "If you're a small business owner, you'll receive new tax credits that make it easier for you to provide coverage for employees if you choose to do so."

Fact Check: False.

Explanation: Senate bill H.R. 3590 included a credit that would cover 50% of premiums for a business with 10 or fewer employees with average wages of $20,000, if that business provided highly comprehensive health benefits and if the business paid the vast majority of every employee’s premium. This credit phases out at a maximum of 25 employees and $40,000 annual compensation for employees. The credit is available for a few years, and then ends abruptly, with no transition period. This credit is highly unworkable for two reasons – first, its short and abrupt nature will dissuade employers from using it due to concern about a large spike in out-of-pocket expenses the day that the credit suddenly ends a few years later. Second is its extremely limited nature – according to the U.S. Census Bureau, the average firm with 10 or fewer employees has an average wage of $27,000, meaning the vast majority of small businesses will not even be eligible for half of the credit.

Letter Opposing the Senate-Passed Version of H.R. 3590, the "Patient Protection and Affordable Care Act"

by Bruce Josten

The below letter was sent today to the members of the U.S. House of Representatives:

The U.S. Chamber of Commerce, the world’s largest business federation representing the interests of more than three million businesses and organizations of every size, sector and region, strongly opposes the Senate-passed version of H.R. 3590, the “Patient Protection and Affordable Care Act.” The bill is fundamentally flawed as its underlying framework is the wrong approach to health reform. Therefore, the Chamber will include House votes on this legislation in our annual How They Voted scorecard.

Several of the main problems with H.R. 3590 are as follows:

Employer Mandate: The bill creates a damaging new mandate on employers that would force them either to offer a government-mandated level of coverage or be liable for significant new taxes. The Senate bill would set these fees at $750 per employee, and the President’s proposal would significantly increase this number to $2,000 per employee, while further adding pro-rated penalties for part-time workers. Worse, an employer who offers coverage could be fined just as much as one who offers no coverage. This mandate constitutes a massive incentive for small businesses not to grow or hire new workers, and many businesses will be hesitant to hire low-income, low-skill workers, who would be likely to trigger the new tax.

New Taxes: The bill imposes nearly $500 billion in new taxes, many of which would fall squarely on small businesses. Taxes on medical devices and prescriptions would be passed through to consumers. Taxes on insurance plans would be passed on directly to small businesses, as large self-insured employers are exempt. A new tax on “Cadillac” benefits will be harmful to small businesses that have more expensive but not necessarily more comprehensive plans, while the new “corporate reporting” paperwork tax will exclusively hit small businesses. The Medicare surtax will tax small businesses that file as individuals. Worse, the President’s proposal would expand this surtax to hit investments and 401(k) plans. Neither the “Cadillac” tax nor the surtaxes are properly indexed, meaning they will both have an AMT-like effect of ballooning and eventually devastating the middle class. The bill also contains hidden taxes in the form of reduced payments to doctors and hospitals by the government, which will be cost-shifted to the private sector while government underpayments already account for 20-30% cost increases for individuals and businesses.

Dangerous Entitlements and Medicare Cuts: The bill cuts approximately $500 billion from Medicare. However, despite double-counting by the Congressional Budget Office (CBO), this money will not be used to shore up the Medicare trust fund, which is projected to be bankrupt by 2017. Rather, it will be used to create a vast new entitlement that will transfer government funds to families making up to $88,000 a year. Worse, H.R. 3590 establishes more new entitlements; first is the CLASS government-run longterm care program that will have an inadequate trust fund to cover promised benefits and even CBO has reported will add tens of billions of dollars to the deficit in the out-years. The combined effect of these large new entitlements will be an ever-expanding federal budget that will be extremely difficult to control. At the same time, the bill allows a 23% pay cut to all Medicare providers, and other pay cuts, that the Centers for Medicare and Medicaid Services stated would drive 20% of providers away from the Medicare program, and cause a scarcity of treatment to Medicare enrollees.

Expensive Plan Requirements: Every health plan will be required to meet certain standards set by the federal government, except for “grandfathered plans,” which the President’s proposal essentially eliminates. The end result of these new requirements, according to CBO, is that health insurance on the individual market will be 10-13% more expensive if H.R. 3590 is enacted, than if nothing is done.

Weak Cost Containment: The bill would do little to lower costs and for many would in fact increase them, which is in part because numerous common-sense cost-containments approaches are not included in the legislation. The bill contains only an inconsequential “sense of the Senate” nod to medical liability reform, despite CBO’s finding that caps on punitive damages for doctors could save $54 billion for the government and untold amounts for the private sector. The bill does not allow all Americans to purchase health insurance across state lines, which the CBO found would lower health care costs by 5%. The bill does not allow new small business pooling arrangements, which the CBO found would not only increase coverage, but would also save money for the federal government and the states by getting people off the Medicaid program and into employer-sponsored plans. The bill would do nothing to curtail state benefit mandates that drive up the costs of health insurance for small business. The bill would not make changes to successful high-deductible health plan models to help them work better with innovative care concepts like patient-centered medical homes. Lastly, the bill would not do enough to move away from fee-for-service and toward outcome- and quality-based reimbursement for medical providers.

Unworkable Small Business Tax Credits: Because of the extremely low wage restrictions for small businesses to be eligible for credits, hardly any small businesses would be eligible. Those businesses that are eligible would be required to offer highly comprehensive plans and pay the vast majority of the employees’ premiums – and after two or three years, the credit would vanish entirely, leading to an immediate spike in a small businesses’ cost. These factors make it highly unlikely that most small businesses would, or would be able to, take advantage of this credit.

The Chamber strongly opposes H.R. 3590 and urges Congress to start over and create a new, bipartisan health reform bill. Should the House, as expected, take up the Senate-passed version of H.R. 3590, the Chamber will include votes on, or in relation to, this legislation—including on the rule—in our annual How They Voted scorecard.

Citizens United and Corporate Governance

by Eric Wohlschlegel

I mentioned yesterday the Hill hearings on the Citizens United decision, wanted to share today Rep. Scott Garrett's statement for the record from one of them:

"I thank the Chairman and appreciate the witnesses appearing before us today. I know there has been a lot of discussion about the recent Citizens United court decision, but let’s just take a moment to review the actual impact of the case. The actual impact of the case on corporate involvement in campaign advertising is not nearly as far-reaching as some in the majority might lead you to believe. Prior to the decision, corporations and unions could already spend unlimited amounts on issue advocacy ads. These ads rarely leave doubt as to which candidate they support, but fall short of explicitly asking the viewer to vote for a particular candidate. With the Citizens United decision, this line can now be crossed, but I would argue it is a fairly minor change in practical terms, and remember, it applies to labor unions too, the single-biggest monolithic contributor to political campaigns in this country.

And when talking about what the decision changes, it’s important to keep in mind what it doesn’t change, as well. The decision does not alter in any way the ability of corporations to give to a candidate’s campaign account. Current limits remain in place. The decision also does not alter the prohibition on corporations coordinating their outside activities with a candidate’s campaign. Outside expenditures must remain completely independent. The decision also does not alter the prohibition on campaign expenditures or giving by foreign corporations. Keep in mind, also, that in many states, corporate advocacy is allowed in governors’ races and other state-level contests, yet I am unaware of any reports of this leading to significant corruption.

Corporate Governance Proposals

In response to the Citizens United decision, Chairman Frank has said, "I am determined to do the maximum that is constitutionally permissible in our power to regulate public corporations." Well, I’m pleased to hear that, at least on this issue, our Chairman recognizes that the Constitution determines our approach, as it does, or at least should, direct all of the work we do here in Congress. I know that the decision has spawned several legislative proposals in the area of corporate governance. But I am always mindful of the proper role of the federal government -- vis-à-vis the states and under the constitution -- which Chairman Frank says he wants to follow in setting policy in the aftermath of this court decision. But the fact remains that corporate governance has always been properly handled at the state, not federal level. And that is how things should remain in the wake of this decision.

For those who are so upset about the decision, which again speaking constitutionally, is simply protecting free speech, arguably the most important protection offered by the constitution – for those upset about the decision who want to empower shareholders to block a corporation’s activities, I ask, shouldn’t you be at least as concerned about the activities of labor unions in this regard, and union members’ ability to have input in a similar way? Many unions impose what amounts to a per capita tax on all of their members for the express purpose of funding the union’s political activities. Can you imagine if a corporation similarly devoted so much of its resources in a similar fashion? The fact is, many corporations are hesitant to participate so directly in political advocacy, while that is arguably the reason for being for many labor unions.

When I hear silence on the other side of the aisle in regards to empowering members of labor unions to dispute their union’s political activities, while being so upset about the potential activities of corporations, I must admit, I am tempted to think that there may be some political calculation going into the targeted outrage. This issue is about free speech and the proper constitutional role of the federal government. Let’s not let politics cloud the committee’s judgment."

Health Care Reform - Breaking Down the Fiscal Awesomeness

by Brad Peck

Yesterday the CBO released updated numbers for the health care reform bill which passed the Senate in December. Here are three (2010-2019): Gross cost: $875 billion; Increased revenues: $473 billion; Deficit reduction: $118 billion.

Leading many to say "That's a pretty good deal." and "That’s a large expansion in coverage at an essentially trivial cost." Obviously the public's rejection of the bill is because they "don't understand the parts of the bill that save money" and "have actually fallen for deceptive spin." 

Insight time.  The American people are rejecting the current legislation because they understand that:

• the promise that future Congresses are going make the hard decisions the current Congress won't is a cheap one.
• in the aftermath of last summer’s outrage over the costs Congress decided to, at all cost, to hide the cost.
• even taking the doctored numbers at face value, we are increasing taxes and fees $47.3 billion a year to "save" $11.8 billion a year.
• that paying for increasing costs is not reducing costs.
• in the second decade of the bill, when we might “save” ~$60 billion a year; is also when the excise tax kicks into high gear.

So sorry ye of "pass something, anything," the public understands that we need real health reform which cuts cost.  And they understand that we need to start over to get it -- they are immune to your consultations, they're quite aware of what these bills will do.

On Trade We Have Runners in Scoring Position

by JP Fielder

John Murphy, coming in at the 4:32 mark in the CNBC clip below, talks about our plan for doubling exports. And yes, we can do this.

The Health Care March of Folly

by Blair Latoff

Patrick Caddell and Douglas Schoen deliver the news in tomorrow’s Washington Post:

As pollsters to the past two Democratic presidents, Jimmy Carter and Bill Clinton, respectively, we feel compelled to challenge the myths that seem to be prevailing in the political discourse and to once again urge a change in course before it is too late… First, the battle for public opinion has been lost. Comprehensive health care has been lost. If it fails, as appears possible, Democrats will face the brunt of the electorate's reaction. If it passes, however, Democrats will face a far greater calamitous reaction at the polls. Wishing, praying or pretending will not change these outcomes. Nothing has been more disconcerting than to watch Democratic politicians and their media supporters deceive themselves into believing that the public favors the Democrats' current health-care plan...Never in our experience as pollsters can we recall such self-deluding misconstruction of survey data.

Tell your members of Congress we need to start over.

Business Applauds as Court Upholds Investor Protections

by Sean Heather

As the Obama Administration concludes its review of the U.S. Model Bilateral Investment Treaty (BIT), today’s Manhattan federal court decision by Judge Leonard Sand in a case between Chevron and the government of Ecuador is welcome news. Moreover, it has broad implications for the business community and the protections afforded to international investors.

Some critics have called for U.S. BITs to be stripped of their provisions allowing investors who believe they have been treated unfairly by a foreign government to have their case decided by international arbitration. Arbitration allows them to avoid resolving their differences with a sovereign nation in that nation’s courts.

These criticisms were heard during the Obama Administration’s review of the Model BIT, which is apparently drawing to its conclusion. The contention is that foreign investors somehow have a right not afforded to U.S. citizens as they can take their claims against the U.S. government out of U.S. courts and into international arbitration.

Leaving aside the many constitutional arguments that counter this claim, as well as the fact that the U.S. government has never lost an investment dispute in arbitration, today’s ruling again sets the record straight. Ecuador was essentially asking a U.S. Court to negate Ecuador’s commitment under its BIT with United States and revoke Chevron’s right to have its investment dispute settled through international arbitration.

Had Judge Sand sided with Ecuador, it would have rendered every BIT that protects U.S. investment abroad essentially null and void. No longer would U.S. companies investing abroad be able to take comfort that their investments were protected and assured a fair hearing in the event a dispute with a foreign government arose.

Allowing the possibility of international arbitration helps ensure the rule of law is upheld and that companies making investments around the world aren’t subject to court systems that are often susceptible to political manipulation.

It might be wishful thinking, but today’s ruling should put to rest any further debate around the appropriateness of investor-state arbitration. If not for everyone, at least, it should be enough of an endorsement to keep it as part of the highly successful U.S. BIT program.

Health Care - Sorry, The Bad News is True

by Brad Peck

First the bad news -- we gave them an extra day to work but it looks like Progressive fact checkers agree with our post from Tuesday that "If the Senate bill is passed into law with the President’s reconciliation adjustments, the following dangerous policies will become law: You cannot keep the plan you have; Your taxes will increase; and Medicare will be cut by $500 billion."

They did try to offer hope that your health care costs won't increase; the debt, the deficit, and federal spending will decrease; and that jobs won't be lost." Good news right? Unfortunately no. On the debt and deficit stuff read links 8,9,10, and 11 here. For more we go to David Brooks:

Then there is the larger issue of exploding federal deficits. A few Democrats are genuinely passionate about this, President Obama among them. He has fought tenaciously to preserve a commission that might restrain Medicare spending. But 90 percent of the people in Congress have no emotional investment in this issue. They’re going through the motions. They’ve stuffed the legislation with gimmicks and dodges designed to get a good score from the Congressional Budget Office but don’t genuinely control runaway spending.

There is the doc fix dodge...There is the long-term care dodge...There is the subsidy dodge...There is the excise tax dodge...There is the 10-6 dodge...There is the Social Security dodge...There is the pilot program dodge...The Democrats have not been completely irresponsible. It’s just that as the health fight has gone on, their passion for coverage has swamped their less visceral commitment to reducing debt. The result is a bill that is fundamentally imbalanced...

Heck the doc fix dodge alone wipes out the CBO's projected deficit reduction. Now on to your health care costs. First, see links 4,5,6, but if you are in a hurry, here's the gist: your costs will go up because a) the legislation does little to address rising costs; b) taxes on providers will ultimately be passed on to consumers; and c) The CBO has said that premiums in the individual market will go up "10 percent to 13 percent." Now this last one is often explained away like this:

To see this more clearly, imagine that the University of Florida decided to give incoming students who receive financial aid an $800 credit to purchase a laptop computer. You'd expect that the average computer purchased by students on financial aid would become a bit more expensive. But that wouldn't be because computers had become more expensive. It would be because people now had money to buy better computers. So too for health-care reform. Premiums for the same policy in the individual market fall by 14 to 20 percent. But people in the individual market, who are largely low-income, will now have the opportunity to purchase better policies that cover more expenses and provide more security. That's a good thing. It's one of the reasons for health-care reform, in fact. And it is not analogous to health-care insurance becoming more expensive, any more than the fact that I could buy a nicer car after getting a better job suggests that cars are becoming more expensive.

This explanation ignores one thing. In dictating what must be included in policies the legislation doesn’t only affect the demand side but the supply side as well. Using the above example, prior to the decision a student may have had the option to buy a netbook at $300, a notebook at $500, a well-loaded laptop at $800, etc... Then the University comes in, gives you credit at the bookstore, but then tells the bookstore they can't stock the netbook or the notebook -- they can only offer the laptop that starts at $800. Sure you might be getting more computer, but this doesn't change the fact that you are paying more. To use the second example, you have to buy the nicer car, better job or not. Bringing it back around, people will be forced to buy more expensive health insurance than they may want, and it will be more expensive, although money will be taken from some people and given to others.

Now on to the jobs claim. This is the message we have been hearing for months and months ad nauseum, that "This legislation alone will create 4 million jobs, about 400,000 jobs very soon." Oh wait, we haven't really been hearing that message have we? In fact the first time I picked up on it was during the health care summit when Speaker Pelosi mentioned it, as she did again yesterday. Since then we have learned that the numbers are from a report by the Center for American Progress that uses hilariously rosy assumptions to come to a pre-determined, conclusion. It is also a report that supporters of the current legislation themselves rebut. How? Because given the American people's priorities if there was any merit whatsoever to the jobs numbers they would be the alpha and the omega of all messaging in support of the legislation. Instead we get speeches where the legislation is barely discussed and insurance company executives are given fangs and tails.

The fact is higher taxes and mandates will be for small business growth: "a load of buckshot to the face." The bills are indeed this bad. But there is still time -- tell your members of Congress today to reject this legislation. And to start over on crafting the responsible health reform we need.

The Unintended Consequences of Iran Sanctions Legislation

by Christopher Wenk

The Chamber, and the U.S. business community, supports the objectives of the Administration and Congress to address ongoing challenges with Iran. However, portions of the proposed Iran sanctions legislation pending on Capitol Hill (H.R. 2194 and S. 2799) are far too broad in their application and unnecessarily restrict U.S. business transactions wholly unrelated to Iran. Tens of billions of dollars of U.S. commerce that has nothing to do with Iran could be disrupted.

For example:

• Financing and insurance of U.S. business could be seriously disrupted. If Lloyds of London insures a shipping line that has a vessel visit Iran just once, Lloyds is sanctioned, and then U.S. companies would be barred from doing business with Lloyds.
• U.S. oil companies very often engage in joint ventures with foreign enterprises. If a foreign enterprise is sanctioned for doing business with Iran, the legislation mandates that the U.S. company terminate its joint venture, resulting in a forced sale of assets that would harm the U.S. company but do little or nothing to inconvenience Iran.
• Many foreign export credit agencies would be subject to sanctions, and the U.S. Ex-Im Bank would be barred from co-financing major sales with them. As a result, U.S. aircraft manufacturers and other big exporters may lose access to billions of dollars of export credit.

In addition, the bill would limit the President’s discretion in applying sanctions, constraining the executive branch's ability to direct U.S. foreign policy as stipulated by the U.S. Constitution. Now that Senate conferees have been named with House conferees soon to follow, we will continue pressing for changes to the bill to avoid some of the unintended and unforeseen consequences it could have on U.S. companies. In the meantime, Congress should also slow down on unilateral legislation while the Administration is pursuing an Iran resolution in the UN Security Council. A multilateral approach to Iran would be far more effective than a unilateral approach.

President Obama’s Trade Agenda and National IP Strategy

by Mark Esper

The President's comments today highlighting the importance of intellectual property to our nation's economy come at a pivotal time, and should be lauded. Our economic recovery, and the jobs that will come with it, depend on the innovation and creativity of the American people.  And so protecting IP rights by enforcing copyright, patent and trademark laws in the U.S. and abroad is critical to our nation's success.

We commend President Obama for recognizing this, as well as singling out the need for a strong Anti-Counterfeiting and Trade Agreement that will raise the bar on enforcement standards and improve cooperation between nearly forty countries.  Agreements such as this, coupled with increased resources and enhanced authorities for law enforcement here in the U.S., will help us address the tidal wave of counterfeiting and piracy—especially on the Internet—that is killing jobs and endangering consumers.

As the President stated in his address today before the Export-Import Bank, we cannot achieve job growth without aggressively protecting our intellectual property. American IP is worth $5 trillion—more than the GDP of any other country— and is responsible for the employment of over 18 million Americans. IP-intensive industries from the life sciences and computer industries, to the entertainment and apparel sectors, drive nearly half of the entire economy, contributing to nearly sixty percent of total U.S. exports.  These numbers will only grow in the years to come.

The President's statement lays a clear and firm predicate for the first-ever National IP Strategy— a government wide plan to improve our IP protection and enforcement efforts in the U.S. and abroad —that the White House is working on and expected to present this summer.  The Chamber and its members look forward to working with the Administration on this strategy and other IP issues, and are encouraged by the President's bold, aggressive defense of innovation and creativity—and the need to safeguard the IP that results from such efforts—as a solution to America's economic challenges and future aspirations.