Harry and Louise Sold Out -- Is the GOP Next?

Familes USA/PhRMA

Harry and Louise are back on TV, but the most famous critics of HillaryCare are now supporters of ObamaCare.  It's a sign of the times.  The big insurance companies that Harry and Louise are best known for representing have been cut in for a slice of the action.  They sold out.  Now the key question is: will GOP senators follow their lead?

Even the U.S. Chamber of Commerce sent a letter to the Senate Finance Committee urging them "to act promptly, preferably before the August recess." It's a big business stampede, and the contours of a rumored bipartisan deal between Senate Finance Chairman Max Baucus and Ranking Member Chuck Grassley of Iowa (along with fellow GOP negotiators Sens. Mike Enzi of Wyoming and Olympia Snowe of Maine) are making increasingly clear that the winners will be big business and big government and the losers are small business and regular hard-working Americans.

First, the deal is expected to mandate that everyone in America buy health insurance.  That means a lot more business for the big insurance companies -- at least in the short term.  You may remember that this was a huge point of contention during the Democratic presidential primaries.

Back then, this is what Candidate Obama said:

"When Senator Clinton says a 'mandate,' it's not a mandate on government to provide health insurance; it's a mandate on individuals to purchase it... Massachusetts has a mandate right now... In some cases, there are people who are paying fines and still can't afford it, so now they're worse off than they were. They don't have health insurance and they're paying a fine. And in order for you to force people to get health insurance, you've got to have a very harsh, stiff penalty. And Senator Clinton has said that we will go after their wages."

He had it absolutely right.  But after being in the White House just six months, Obama has already caved in to Beltway insiders and special interests.  Now he supports an individual mandate, and under the House bill at least 8 million uninsured people will be forced to pay a new 2.5% income tax as a penalty. Those people, by the way, make less than $250,000 dollars, breaking another vaunted campaign promise.  But it got Harry and Louise back on TV and on his side.

The biggest problem with an individual mandate is that politicians will define what type of coverage meets the mandate.  Over time, they can be expected to heavily regulate what procedures and treatments must be included or excluded, and eventually we'll have an insurance system that is private in name only, which a meaningless choice between a handful of plans all designed by politicians in Washington.  It's a backdoor Washington takeover.

Second, the deal is expected to replace the so-called public plan "option" (which would move people out of private insurance and onto a government-run system, and is therefore strongly opposed by big insurance companies) with a system of regional purchasing cooperatives, which was the centerpiece of the HillaryCare plan but is now for some reason considered a centrist compromise-- probably because the big insurance companies can live with it.  But the co-ops will still almost certainly require huge amounts of taxpayer funding to stay in business, and people who end up in the them will likely have limited choices.

Third, the deal is expected to water down but keep some form of pay-or-play mandate on employers, which requires them to provide health insurance benefits equal to standards set by extensive new regulations that far exceed what any company currently provides, or pay some form of payroll tax penalty.  The House Democrats would set the payroll tax at 6 to 8 percent, while a bipartisan Senate deal is likely to set it to a lower amount set to cover not the full cost of government-provided care but the amount of new subsidies that would offered to workers to buy private care.

Even with this change, smaller and medium-sized companies will be hit hardest by any new fees.  Many large corporations already spend more than 8 percent of payroll on health care, and would be all too happy to dump their health care obligations on the government and pay a predictable tax.  So a lot of big businesses can live with this provision, and some may even be helped by it.

Finally, the deal will likely deal a huge blow to small businesses: new taxes on high-income earners, either through a surtax (as the House Democrats proposed), a tax on their health care benefits, or some other slate of new taxes devised by the Senate Finance Committee.  These will be sold as taxes on the "rich," but will fall mostly on small businesses and the middle class, because big companies and the rich can generally pass the cost of higher taxes onto their customers and employees.

Taken together, these provisions amount to an attack on small businesses to benefit both big government and its big business allies.  No wonder big businesses support the bill and are pushing so hard for a "bipartisan compromise" in the Senate, even though it would still allow Washington to interfere in our health care.  Let's hope that the lead Republican negotiators in the Senate don't sell out the way Harry and Louise did.

Mr. Kerpen is director of policy for Americans for Prosperity, which runs the health care web site www.JoinPatientsFirst.com.  He can be reached through www.philkerpen.com.