Welcome to Fantasy Island-The Baucus Health Care Bill

Before I go any further let me state my real life experience that has led to my informed opinion of “more Congressional Bull Crap”. I am a 70 year old retired business professional having over 46 years experience with budgeting, forecasting, acquisitions, divestitures, and due diligence for domestic and international businesses.

Anyone with an ounce of intelligence knows a budget or forecast is only as good as the foundation assumptions it is built upon. In business a thorough knowledge of the market place, competition and consumer demand all impact anticipated revenue from sales. Additionally, materials and labor costs must be controlled in order to maintain a gross margin (profit) sufficient to cover the remaining fixed and variable overhead expenses, or cost of doing business. Net Profit, if any is what is left after covering all costs associated with the goods or services sold.

The same rules apply to budgeting by the government when contemplating any new legislation. First, how realistic are the assumptions that produce the revenues to pay for costs of the legislation. Call the revenue sources what you like, in reality they equate to taxes, or diverting taxes generated for another purpose. In other words, either taxes will increase or some existing service must be eliminated. As with any private business costs for materials, labor and overhead must be controlled. Not a strong suit for the government.

In private business, increases in sales generate revenue that cover materials and labor costs and offset fixed and variable overhead with a resultant increase in net profit or income. Experience in government programs paints a much different picture. Assumptions concerning generating revenue from savings from previously legislated programs are rarely, if ever, realized. Once a government program or benefit is instituted it usually remains forever. Additionally, assumptions concerning revenue generation from taxing businesses or benefits they provide employees results in elimination or major reductions in those benefits or having the costs passed on to the consumer. Thus a tax by any other name is still a tax.

Typically Congress is reticent to repeal any legislation benefiting the Electorate for fear of retaliation by the voters in a future election bid to retain their office.

Now, in light of the foregoing let’s examine the Baucus Health Care Bill assumptions.

  • Taxing Cadillac health care plans and medical implement suppliers in order to produce 200 billion in revenue.

The immediate reaction from businesses is to reduce benefits to a level considered adequate or cancelling benefits all together and paying the penalty tax to support some form of exchange or government program. In either event the revenue generated under the bills assumption would be grossly overstated.

  • Cost cutting within Medicare to generate 400 billion in savings.

The assumption is totally unrealistic in light of the expanded coverage in Medicare due to new retirees and those unable to secure private insurance from their employers. Logic would state that increasing coverage through Medicare/Medicaid to the uninsured, with these programs approaching bankruptcy, must result in either increased taxes on all income levels, or severe rationing of services, or both.

  • A penalty assessed to individuals refusing to purchase health insurance.

There is a strong opinion that this provision will be judged to be unconstitutional. Thus any revenue assumptions from this provision are falsehoods not to mention the costs associated with the increased bureaucracy required to administer the provision.

Not withstanding the CBO (Congressional Budget Office) preliminary analysis that the Baucus bill would be deficit neutral, based on the fantasy assumptions contained in the bill, a review of those assumptions shows them to be totally unrealistic.

Tell Congress to take a real first step to making health insurance affordable by:

  • Allowing Insurance Companies to compete across state lines.
  • Providing Tort reform.
  • Allow individuals tax credits or the same treatment as businesses get for health insurance.
  • Clean up Medicare Fraud.

Don’t allow Congress to destroy the best Health Care System in the world for a few minor reforms needed to make it better.

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