FAA Air Transportation Modernization and Safety Improvement Act -- Continued --
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Mr. KYL. Madam President, yesterday I spoke on one of the reasons for the repeal of this legislation; that is to say, the support for the amendment to repeal the health care legislation that is pending before us. Today I wish to speak about a couple other reasons to support that amendment.
One of the things that was said in the campaign to pass the health care bill was that those who liked their current health care would be able to keep it. But as we know now and as we pointed out prior to the bill's passage, provisions in the law would cause many Americans and will cause many Americans to lose their coverage. That is why the administration is now giving out waivers for some of the bill's most burdensome provisions.
I wish to speak for a moment about these waivers the administration has granted and the problems that the waivers reveal with the bill as a whole.
So far, the administration has granted 729 waivers. All of these are temporary. They protect companies and labor unions from one of the bill's most onerous mandates--the phasing out of annual caps on costs paid by insurers. Another four waivers were granted to States applying on behalf of insurers. According to the administration, waivers may be granted if the applicant can show that a ``large increase in premiums'' or a ``significant decrease in access to coverage'' would occur absent a waiver.
So far, the waivers cover 2,283,106 people. That is more than 2 million people whom the administration has had to protect from its own bill.
All of these waivers were granted to limited benefit plans, or so-called mini-med plans. About 1.4 million Americans have these mini-med plans, including many part-time employees who work in the restaurant and retail industries. These plans are low cost and usually have an annual cap on costs the insurer would pay out.
Under the Obama plan, these plans would be outlawed. A phaseout on annual caps begins this year. Starting this year, plans cannot impose an annual limit of less than $750,000. That threshold gets progressively higher, until 2014 when ObamaCare will prohibit annual caps altogether.
What this does, of course, is create an incentive for employers who currently offer mini-med plans below the $750,000 threshold to drop their coverage completely until the employer mandate and penalties become effective in 2014. They can either comply with the requirements of the health care law or pay a fine for each employee.
The employees caught in this mess who currently have coverage through mini-med plans will have to hope in the meantime that their employer can get a waiver; otherwise, those employees will have to wait until 2014 and buy a government-approved policy from the new insurance exchanges or hope that their employer is in compliance with the many employer requirements in the bill.
McDonald's, for example, which offers mini-med plans to many of its employees, received a 1-year waiver. The company warned that absent a waiver, 30,000 employees could lose their current coverage and would be left ``without an affordable, comparably designed alternative until 2014.''
It is not clear what will happen when the 1-year waiver expires. That is another part of the problem. The waivers are often given on the condition that the recipient brings itself into compliance during the waiver period. Whether the waiver renewals are available is unclear. As with many other provisions of ObamaCare, the uncertainty for businesses surrounding annual cap waivers is immense.
While the waivers are welcomed by those who benefit, they represent a poor way to run the government or health care. When the government picks which entities will have to abide by the law and which ones will not, it is literally picking winners and losers. That is not the recipe for objective or wise policymaking. It is called discrimination.
I will note that a large number of these waivers were being given to the administration's political allies. Unions, for example, many of which praised the bill's passage, are a major beneficiary. Of the 733 waivers granted, 182 went to unions. That is a quarter of all the waivers, even though unionized workers make up only 7 percent of the private workforce.
Many of the unions applying for waivers are the very same that were full of praise upon passage of ObamaCare. In its press release praising passage of the bill, the Service Employees International Union gushed that ``it is a new day.'' About 6 months later, Local 25 SEIU applied for a waiver from the annual limits limitation for 31,000 of its members. It was granted 2 weeks later. Apparently, it is a new day--just not for 31,000 SEIU members.
Similarly, when the bill was enacted, the American Federation of Teachers referred to it as an occasion where ``morality trumped greed.''
Six months later, its New York City affiliate obtained a waiver affecting 351,000 individuals.
In the recent column in Forbes magazine, law professor Richard Epstein explains the dangers of administrative discretion related to waivers and how the waiver process can undermine the rule of law:
Waivers are by definition an exercise of administrative discretion that benefits the party who receives its special dispensation. Nothing in Obamacare explains who should receive these waivers or why. The dangers from this uncertainty are enormous. ..... Without major steps to overhaul or repeal Obamacare, government by waiver will become standard operating procedure to the detriment of us all.
This is a bill that was written behind closed doors, creates a huge uncertainty and problems for job-creating businesses and their employees, and now waivers are being dispensed by the administration to protect almost 2.3 million people from the very law it fought so hard to get passed.
These developments are yet more confirmation that the law is deeply flawed and one more reason why it should be repealed in its entirety.
The second issue I would like to speak to is the fact that under this law, there are substantial increased costs, but they are being masked by the way the bill has been written, and the calculations, therefore, some have suggested, would actually result in a savings of $230 billion. This is only plausible if you believe the way this bill was written was an honest way of stating its costs. It is not that the CBO has done anything wrong in its calculations, it is that it was told how to calculate certain things. The bill's authors said: Never mind what the reality or truth is, here is how you will calculate the cost of it. The CBO, as a functionary, did exactly that to come up with a number.
But former CBO Director Douglas Holtz-Eakin recently cowrote an article, along with Joseph Antos and James Capretta, explaining that the bill's purported deficit reduction is based on ``budget gimmicks, deceptive accounting, and implausible assumptions used to create the false impression of fiscal discipline.'' The fact is, repeal will not add to the deficit. The bill itself is the budget buster, not repeal.
I am in favor of full repeal of the so-called Affordable Care Act. There are many problems with this bill and many reasons to support repeal. Today, I want to talk about cost.
A central talking point from the bill's supporters has been that the bill, intended to cover 32 million Americans, will reduce the deficit by about $230 billion, according to the Congressional Budget Office. Therefore, repeal
will increase the deficit by the same amount.
Maybe this sounds plausible--but only until you study these numbers more closely. Only in Washington could the ``cost'' of repealing a massive entitlement program add to the deficit.
This is not because of anything the Congressional Budget Office did wrong. Remember, when the Congressional Budget Office calculates these estimates, it is required to accept every assumption it is given, however unrealistic such assumptions are. That's how the authors of ObamaCare got CBO to produce such a favorable number.
Indeed, former Congressional Budget Office director Douglas Holtz-Eakin recently cowrote an article, along with Joseph Antos and James Capretta, explaining that the bill's purported deficit reduction is based on ``budget gimmicks, deceptive accounting, and implausible assumptions used to create the false impression of fiscal discipline,'' and that repeal will not, in fact, add to the deficit. The bill itself is the real budget buster. Not repeal.
Let me walk through the false assumptions and gimmicks Holtz-Eakin and his co-authors describe.
First, as Republicans pointed out again and again before the bill's passage, the bill's original $938 billion pricetag does not reflect the true 10-year cost. That estimate was generated using 10 years of taxes to pay for 6 years of subsidies. Remember, while the taxes begin this year, the subsidies don't kick in until 2014. So, the 10-year cost of the bill's full implementation is actually about $2.3 trillion.
Second, there is an additional entitlement program within this new entitlement: the so-called CLASS Act, a new, government-run, government-funded program for long-term care, intended to compete with long-term care plans provided by private insurers.
Participants would pay into the system for 5 years before they start collecting benefits. So, for at least the first 5 years, the program would generate surplus receipts for the government. But eventually, outflows would exceed receipts. This is why the chairman of the Senate Budget Committee referred to the CLASS Act as ``a Ponzi scheme, the kind of thing that Bernie Madoff would have been proud of.''
This is a bailout waiting to happen. As Holtz-Eakin, Antos, and Capretta write, ``CLASS Act hitched a ride on the Affordable Care Act for one reason only: Premiums are collected in the first 10 years, but no benefits are provided. Voila, it creates the perception of a $70 billion deficit reduction....... Only in Washington could the creation of a reckless entitlement program be used as an `offset' to grease the way for another entitlement program.''
Third, is the illusory savings from cuts made to Medicare's health-care providers, which would bring payments below those made to Medicaid providers. We know that the network of doctors and hospitals willing to see Medicaid patients is constrained in part because of low reimbursement rates.
Accordingly, about 15 percent of America's hospitals and physicians would have to stop seeing Medicare patients to help curtail their losses, although the bill assumes that seniors would not see any change in their care. Holtz-Eakin, Antos, and Capretta write, ``The idea that Medicare could pay less than Medicaid is such sheer folly that Congress will rapidly reverse course. The truth is these cuts cannot be relied upon for anything.''
In addition, the bill double counts these so-called Medicare ``savings,'' claiming that they can both shore up Medicare's solvency and help pay for ObamaCare.
Fourth, ``a central CBO assumption'' about how many Americans will get federal health care subsidies ``could be disastrously off the mark.''
Today, about 111 million Americans are eligible for subsidies through the new insurance ``exchanges'' if they don't have an employer-based plan. But the bill assumes that only 19 million would receive these subsidies. This assumption fails to take into account the incentive the bill creates for certain employees to find their way onto the exchanges, rather than accept coverage from their employers, if offered. As the authors note, ``the new subsidies are so generous that low- and moderate-income workers come out way ahead if they get paid in cash, not benefits, and move to the new entitlement.''
If only the 35 million lowest paid workers jump onto the new entitlement, Federal spending will rise by another $1 trillion in the first decade alone.
So, those are four reasons that the purported cost estimates for this bill are simply wrong or misguided. It's clear that the claims that the bill will reduce the deficit, or else increase it upon repeal, do not hold up upon close inspection. Repeal is not a threat to the budget; to the contrary. The real budgetary threat is ObamaCare itself.
For these reasons, and many others, I support full repeal of this bill.
Again, there were four basic false assumptions that were built into the legislation in the way it was drafted, which theoretically demonstrate a savings of money through the adoption of the legislation, as the authors point out, but which actually result in not a savings but an increase in the Federal budget deficit.
One of these has to do with the fact that taxes are collected for 10 years, but costs only accrue over 6 years. Obviously, you are going to get some money that way. But after that first 6 years, you have to count the costs as well as the revenue taken in.
Another is the inclusion of the so-called CLASS Act, which has been described by some as a Ponzi scheme--actually, by the chairman of the Senate Budget Committee--because it collects all the money upfront and doesn't pay out any benefits. Once you have to pay out benefits, there will be a cost. That is a way to show that you are taking in money and you are not spending it. But it is a dishonest way to write the bill.
Third, the way the cost of Medicare was calculated. The $500 billion savings is not a savings at all but rather goes to pay for other parts of the bill. It doesn't help Medicare at all. It only works if, as the Congressional Budget Office said, Congress actually follows up with the cuts to hospitals and physicians, which nobody believes Congress would have the courage to do.
Finally, there are the subsidies and exchanges calculations, which, as I pointed out in these comments, are woefully understated, as a result of which it is likely we will have a significant budget deficit rather than a savings as a result of this legislation.
In fact, repeal of the bill is going to save taxpayers money. The legislation is what costs money. Think about this: How can you cover an additional 30 million people--or however many will be covered by this--without increasing costs? It can't be done. It would not be done under this legislation. In addition to the reason I talked about yesterday--the cost of Medicaid to the States--and the two points here today and the fact that these waivers are being granted in a discriminatory way only demonstrates that the underlying bill is not a good idea and that the cost calculations are way off.
I hope my colleagues will take this opportunity to follow the advice of the American people and vote to repeal ObamaCare.
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