The Baucus Prescription: Higher Taxes and Higher Premiums (Updated)

Today, the Senate Finance Committee is scheduled to vote on Senator Max Baucus’ health care overhaul. Like most Americans, I believe that our health care system needs to be reformed. However, this bill is a tax and spending bill masquerading as a health reform bill. It gives government bureaucrats far too much power and encroaches on freedom more than any legislation since LBJ’s Great Society experiment. It is bad for the country and bad for the economy.

Senate Democrats are pushing a vote on the 1,000-page bill now because the Congressional Budget Office recently estimated that the bill cost “only” $829 billion over the next 10 years. In truth, the bill raises taxes immediately, but the benefits do not kick in for another four years, so the 10-year numbers are distorted. This is an expensive experiment that cuts Medicare, and exacerbates state government budget problems by dramatically expanding Medicaid without providing additional funding.

How do the Democrats propose to pay for the rest of the new spending? There are a massive amount of tax increases in the bill, including over $200 billion in tax increases on insurance premiums, new taxes on individuals and employers, and over $120 billion in new taxes on medical device makers and other health care businesses. All of these tax increases concern me, but the latter category does so especially: My state is the home of Medtronic, Boston Scientific, 3M, St. Jude Medical and other medical technology makers that employ 60,000 Minnesotans and save and improve countless lives. Increasing taxes on these businesses would not only be an unwise burden on these employers, but would siphon money otherwise spent on research and development. It would also risk the cost of increased taxes being passed on, directly or indirectly, to those who rely on such devices or who cover their cost.

The Democrats are proposing these tax increases to offset the costs of mandating and subsidizing the purchase of health care by every American. Expanding health care access to all Americans is an admirable goal and one that I share – but one that also cannot be accomplished without addressing the root cause of America’s health care crisis, something the Baucus bill fails to do.

Expanding access is important, but achieving that goal, and doing so in a fiscally sound manner, requires that we focus on the forces driving up health care costs. Otherwise costs will continue to grow in an unsustainable way, and, as we’ve seen in other states, government mandates will only shift the burden of exploding costs onto the shoulders of taxpayers and ordinary Americans unable to cover them.

There are many bipartisan ideas that would actually cut health care costs, like medical liability reform, allowing employees to keep their insurance when they switch jobs, standardizing health information technology, and allowing consumers to purchase insurance across state lines. In Minnesota, we’ve passed reforms that made price and quality more transparent for patients, moving the health care system towards paying for and achieving better health care outcomes, and empowering patients themselves to help drive down costs.

Congress should look at what we are doing in Minnesota, among the healthiest states in the nation, where we have the highest concentration of health savings accounts in the country and other market-based reforms that are containing costs. A vote for the Baucus bill today is a move in the opposite direction – towards higher premiums, higher taxes, and more government.

UPDATE: Today I rolled out a plan in Minnesota to combat the high cost of health care in a way that improves quality and costs for patients and taxpayers. You can read more about it here.