The ChamberPost

Getting Health Reform Right

by Dick Castner

Congressional recesses serve a valuable purpose. They provide members of Congress with extended periods back in their states and districts, where they can connect with constituents and find out what’s on their minds.

At no time was this truer than with the recess just ending. Constituents packed town hall meetings in numbers never seen before. Most came to express serious concerns about the direction Congress is headed on health care. There’s plenty to be concerned about.

Before breaking for recess, four of the five committees that handle health care (three in the House, two in the Senate) approved massive reform bills. They acted with remarkable speed, given the importance of the issue and its complicated nature, and they acted with Democratic votes only. The Senate Finance Committee might still produce a bill with some bipartisan support. For months, three of the committee’s Democrats and three Republicans have huddled in marathon negotiations behind closed doors. They’re up against a September 15 deadline; if they don’t have a bipartisan bill by then Democratic leaders are preparing to go it alone.

Among the concerns voiced at town hall meetings across the country were several that the U.S. Chamber strongly shares. To cite the largest:

• Government-run plan. Touted as a way to "keep the insurance companies honest," it would instead put many of them out of the health insurance business. The government can’t and won’t be a fair competitor with private companies. It can bury many of its costs and has no need to make a profit. Three of the four committee bills would allow the government to reimburse providers at or near Medicare rates, which are far below market and would encourage cost shifting to the private sector on a massive scale. Cheap premiums for the government plan could dominate the market, leaving us a short step from just one option for all Americans.

• Employer mandate. In the House versions, employers with payrolls that exceed $250,000 annually would have to provide "qualified health benefits" to their employees and their employees’ dependents. They’d have to pay at least 72.5% of the premium cost for employees, 65% for dependents. If they don’t, they would pay a payroll tax of up to 8% of their total payroll to the government. All of this comes with onerous new record keeping requirements. After five years, a government board would define what a "qualified health plan" must contain, limiting design flexibility for ERISA plans and setting the stage for costly coverage mandates.

• Who pays? Estimates of what all of this would cost, especially covering most of the uninsured, run well north of $1,000,000,000,000 (that’s trillion) in additional spending over ten years. Supporters claim their bills will be "deficit-neutral" when they come to the floor. But the Congressional Budget Office (CBO) says they have a long way to go, with the House piling up $239 billion in additional deficits over the first ten years. That’s after hundreds of billions in unspecified cuts to Medicare providers and hefty income tax surcharges to the highest earners, many of whom are successful small business owners. The administration and Senate leaders have discussed a long list of personal and business tax increases that could hit everything from nonprofit hospitals to sugary drinks. Underlying all of this is the debate over whether to tax employer-provided health benefits. Candidate Obama said he wouldn’t do it but as Willie Sutton said about banks, "that’s where the money is."

The business community has as large a stake in health care reform as anyone. Employers voluntarily pay more than $500 billion annually to provide coverage for nearly 177 million Americans. But soaring premiums make it harder each year for employers to provide these vital benefits. The U.S. Chamber of Commerce is committed to finding ways to make quality health care more affordable and accessible for all.

There is widespread agreement about much of what is being discussed, things that could pass with large bipartisan majorities. We could reform the insurance system by eliminating restrictions based on pre-existing conditions or health status; guaranteeing that anyone can buy a policy and that those policies couldn’t be revoked; placing reasonable limits on rating differences; providing subsidies for those who can’t afford coverage; and requiring everyone to have health care coverage. We could control costs by using health information technology; focusing on wellness and prevention; simplifying administration; combating fraud and abuse; and letting individuals and small businesses deduct health insurance expenses. We could create a vibrant marketplace with a health insurance exchange that connects consumers with insurance options, removing fragmentation and spurring choice and competition. These things needn’t cost a trillion dollars and would make a real difference in people’s lives.

One thing on which opinions differ but that should be on the table if we’re serious about controlling costs: medical liability reform.

What can you do?

Two things: Join the Campaign for Responsible Health Reform to stay informed; and contact your members of Congress as they return from recess to Washington. Urge them to step back from the direction they were headed in July and focus on sensible reforms that will improve the quality and availability of health care while holding the line on costs.

Going Green Alone

by Dick Castner

What are you willing to pay to make a statement on global warming? Does $1,600 a year sound about right? That’s what the Congressional Budget Office says it would cost a typical household to cut emissions of carbon dioxide (CO2) by 15 percent. The goal of H.R. 2454, the "American Clean Energy and Security Act of 2009," is more ambitious. It would require that CO2 emissions be cut to 17 percent below 2005 levels by 2020. Sponsors Henry Waxman (D-CA) and Ed Markey (D-MA) succeeded in moving H.R. 2454 through the House Energy and Commerce Committee on a 33-25 vote late last month. They’re pushing for a floor vote by the Fourth of July.

The vehicle for achieving these emissions reductions would be a new cap-and-trade system. Under it, the federal government would issue permits for every ton of CO2 released into the atmosphere. To ease the initial cost of the program to electricity consumers, Waxman and Markey agreed to give away 85 percent of the permits over the next 20 years, with most going to electric utilities, natural gas distribution companies, trade-vulnerable industries, renewables, and various clean energy research initiatives. But percentages of free credits to those industries as well as the total universe of CO2 credits would shrink every year, making the remaining credits more valuable. Companies that have to buy them at auction would soon find it cheaper to invest in energy-saving technologies than buy the permits they need to continue their old ways. All of these higher costs would be pushed along to consumers – you, me, and our families.

By 2020, the total volume of CO2 permits issued would be 17 percent less than total emissions of that gas were in 2005. Higher prices for almost everything we buy would stretch family budgets by more than $1,600 a year. The effects on the overall economy are a wild card: some industries will clearly gain, but those tied to burning fossil fuels have a lot to lose. Huge dislocations are a certainty.

That covers a good part of the cost side of the ledger. What about the benefits? The U.S. now emits less than a quarter of global CO2 production, and that portion is steadily shrinking as developing countries grow faster than we do. So a 17 percent reduction on our part would cut worldwide emissions by just four percent; even less as other countries grow: not enough to affect climate trends in any appreciable way.

Real progress depends on the rest of the world matching our efforts, and on that front there’s cause for concern. Talks with China – the world’s largest source of CO2 – broke down last week over wildly different views of what can be accomplished. China wants the U.S. to reduce its CO2 emissions to just 60 percent of 1990 levels by 2020 and contribute one percent of our total GDP to clearing the air in China and other developing countries. China also confirmed it will not commit to any specific reductions of its own.

This cap-and-trade bill, at more than 1,000 pages, contains many provisions that are objectionable in their own right, most notably a renewable energy mandate that appears to be both costly and impossible to achieve. But to just touch on a few:
 

Change

by Dick Castner

Barack Obama’s sweeping victory on Tuesday was the biggest win for a Democrat since Lyndon Johnson’s in 1964. During the long campaign he made promises and offered positions in many areas, but the election wasn’t really about them. It was his theme of "change" that resonated with voters who were tired of the gridlock and finger pointing that have characterized so much of our recent politics. His challenge now is to deliver that change.

To enact his agenda, President Obama will have the largest congressional majorities for either party since the beginning of the first Clinton Administration. The next Congress will be much more Democratic than the one that is coming to a close. The party picked up at least 19 seats in the House and six in the Senate, with more likely following final vote counts and recounts.

The new President may get a longer "honeymoon" than most, due to historic nature of his victory. During this period he’ll be able to move at least a few big legislative packages that address important national concerns through Congress with little resistance – if he chooses carefully and moves tactfully.

What then? That’s up to the President, House Speaker Pelosi, and Senate Majority Leader Reid. The most memorable "change" that President-elect Obama promised was to reach across the aisle and end partisan divisiveness to solve our problems. In the House, the newly-enlarged Democratic majority won’t need Republican votes to pass almost anything they want. But Senate Democrats will likely fall short of their goal of reaching a 60-seat filibuster-proof majority. They’ll need to attract at least a few Republicans to end filibuster threats and get final votes on their priority bills.

Democratic leaders already have a long agenda of legislative priorities left over from the last Congress that they would understandably like to pass. But will Senate Republicans be likelier to go along next year than they were this year, at least after the honeymoon is over?

It’s up to the incoming President and Democratic congressional leadership to engage congressional Republicans in the policymaking process; they have both the power and the responsibility to get things done. If they make that effort they’ll almost certainly find enough willing partners to make major progress on education, energy, the environment, health care, transportation, getting the economy moving again, and much more.

The U.S. Chamber of Commerce is ready to be part of all of this. As U.S. Chamber President and CEO Tom Donohue said on election night, "As America turns the page, the U.S. Chamber shares with our fellow citizens the excitement of beginning a new chapter in our national life. We are a 'can-do' nation that can overcome all the difficult challenges that face us today. The U.S. Chamber has a long track record of successfully working with both parties and we are ready to go to work to restore economic growth, create jobs, and ensure that our businesses and workers can compete around the world."

There’s a role in this for all of us. Let’s get started.

Congress Comes Through

by Dick Castner

It was a tumultuous week. An awful lot happened between Monday’s 205-228 rejection of the financial rescue package by the House of Representatives and Friday’s 263-171 approval of an improved package by that same House.

The rescue provisions of the final package authorize the Treasury Department to buy up to $700 billion in troubled financial assets in several stages, beginning with $250 billion right away. Treasury will receive an equity stake in financial institutions that choose to participate. Those companies also face limits on the compensation of top executives. Programs to help homeowners avoid foreclosure would be strengthened and expanded. Congress, the GAO, a new inspector general and a new oversight board will monitor all aspects of the program.

Three things happened between Monday and Friday to turn the House around:

1. Stock and especially credit markets responded quickly and negatively to the House vote, threatening a financial market meltdown.

2. The Senate sweetened the package in important ways, increasing the FDIC insurance limit from $100,000 to $250,000 and including the popular tax "extenders" (AMT relief, deduction for state sales taxes, credits for alternative energy and R&D, more). They also added some relatively small but extraneous provisions. Then on Wednesday they passed the package with a resounding 74-25 vote.

3. The tide turned on calls and letters into House offices. Before the Monday vote they were running more than 10-1 against the package. After Monday it shifted toward 50-50, with the volume of positive contacts growing every day.

Business played a huge role in reversing the tone of contacts to House offices. "Main Street" Chambers of Commerce showed real leadership by rising to the occasion on short notice, often weighing in despite mixed feelings because they knew something had to be done. One thing our lobbyists heard loud and clear on Capitol Hill all week: Their actions helped make the difference in winning.

The rescue package is far from perfect, but it should avert the financial crisis that was almost certain otherwise. There will be plenty of time later to put mechanisms in place to ensure that it doesn’t happen again. For now, we should recognize our Senators and Representatives who came through on this tough issue. Take a minute to thank those who voted yes and, if you’re inclined, express disappointment to those who voted no. Check the roll call votes for the Senate and House then use our Action Center to send a message to your Members of Congress.

We would like to thank everyone who stepped up when it mattered most. Once again we’ve shown that the American business community can accomplish big things by working together.