When Will We See Fiscally Responsible Health Reform from Congressional Republicans?

By John R. Graham,

Just a few weeks ago, Republicans in Congress announced a oint budget resolution, which (if ever enacted) would repeal Obamacare and balance the budget in ten years. That is all well and good. Unfortunately, when they pass health care legislation that actually has a chance of becoming law, they fail to pay for their promises. How can they be trusted to repeal and replace Obamacare with fiscally responsible, patient-centered health reform?

The Congressional Budget Office (CBO) estimates repealing Obamacare would increase the deficit by $353 billion over ten years, before considering the economic growth that would result from repeal. Because repeal would grow the economy, federal tax revenues would increase by $216 billion, resulting in a net deficit of $137 billion. So, when Republicans actually repeal Obamacare, they will still have to cut $137 billion of spending elsewhere.

Yet, they cannot even identify miniscule spending cuts to pay for current health-related bills. The latest is repeal of the medical device excise tax. This is a 2.3 percent excise tax on medical devices – from pacemakers to MRI scanners – to help pay for Obamacare. On June 18, the House of Representatives voted to repeal the tax. Every Republican present voted for it, plus about one fifth of the Democrat members. With those 46 Democrats joining the majority, the votes in favor added up to 280, just eight short of the number needed to override the promised presidential veto. It awaits a vote in the Senate.

President Obama has promised to veto the bill because it is fiscally irresponsible. The Congressional Budget Office estimates that device tax repeal will increase the deficit by $24 billion in the next 10 years. Spending offsets? Zero. Nada. Zilch.

If there is a chance to get rid of any part of Obamacare, it should be dealt with at the earliest opportunity. So, by all means, Congress should eliminate this tax. And if it can get enough Democrat votes to override the president’s veto, better yet.

However, there is no excuse not to find spending offsets to ensure repeal does not increase the deficit. Indeed, it is easier now that it was a few years ago. CBO now figures the revenue from the tax will be much less than it estimated in 2010.

President Obama himself has proposed a way to cut Medicaid spending that should appeal to every conservative. In his February 2012 budget, the president proposed reforms to “provider taxes.” These are a trick used by hospitals and states to increase federal transfers. Hospitals agree to submit to a special “tax” by the state. However, this tax flows into the state Medicaid program, which uses it to get more federal dollars. So, hospitals actually increase their revenue by more than the “tax.” Stopping this abuse would save $22 billion over ten years. All Congress has to do is lift this right out of the president’s 2012 budget to cover almost all of the device tax repeal.

President Obama’s administration is not known for a commitment to fiscal discipline, but even he has had enough of Republicans’ fiscally reckless approach to health spending. It is long past time for Congressional Republicans to walk the talk on balancing the budget.

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