REP. KRATOVIL RESPONDS TO HIS CONSTITUENTS’ CONCERN ABOUT “OBAMA-CARE”

Thank you for contacting my office to share your thoughts on healthcare reform. I believe that rising healthcare costs represent one of the biggest threats to our nation's long-term economic growth and fiscal health.  Failing to fix the broken status quo would increasingly burden families, small businesses, and the federal government with unsustainable costs.  We have an opportunity to lower costs, improve quality, expand coverage, and increase access in our healthcare system, but passing a bill that fails to accomplish these goals would represent a waste of this historic moment and would only perpetuate existing problems. 
 
On November 7, 2009, the House of Representatives considered H.R. 3962.  This healthcare reform legislation includes a number of provisions I strongly support, such as eliminating preexisting condition exclusions, addressing the Medicare Part D "donut hole", and expanding coverage to more low-income working families.  However, I am not satisfied that H.R. 3962 is a fiscally sustainable approach to achieving these goals, nor do I feel this bill does enough to reduce long-term healthcare costs.  Consequently, I could not support H.R. 3962 when it came to a vote.
 
At the start of this debate, I laid out a number of principles that would guide me in reviewing and voting on healthcare legislation.  I pledged that I would not vote for a plan that would strip anyone of their current coverage, increase the deficit, or hurt small businesses.  Moreover, I stated that I viewed cost containment as a central requirement of any successful plan; simply shifting these costs from individuals to the federal government would do nothing to curb systemic healthcare inflation over time. Over the August recess, I had an opportunity to speak with thousands of constituents and stakeholders during town hall meetings, individual visits, and telephone town hall forums.  While I believed that some of the fears expressed in those conversations were unfounded, I also recognized that many of the concerns and suggestions were legitimate and deserved strong consideration.  After returning to Congress in September, I led a group of my fellow Freshman Representatives in sending a letter to House Leadership urging them to incorporate some of these ideas, such as increasing interstate competition, reducing medical malpractice suits, and protecting small businesses.
 
While H.R. 3962 makes some progress toward some of these principles, it fell short on a number of others, and I am not satisfied that it is a fiscally sustainable approach to fixing our healthcare system.  I agree with the Washington Post's assessment of the bill in recent editorials, one of which stated that H.R. 3962 "does not do enough to address rising healthcare costs and is not financed in a sensible, sustainable way."  The Associated Press reports that the cost of this bill to American taxpayers will top $1.2 billion, more than $300 billion above the target that President Obama set for healthcare reform.  The bill's fiscal impact is even more alarming when viewed alongside H.R. 3961, a companion bill that will fix the reimbursement formula by which doctors are paid under Medicare.  This "Doc Fix" language was included in initial drafts of H.R. 3200, but was broken out into a separate bill to lower the overall cost of the revised H.R. 3962.  While the Congressional Budget Office projects that H.R. 3962 would reduce the deficit by $104 billion, these savings are more than wiped out by the $210 billion cost of the companion "Doc Fix" legislation. Taken together, these two bills would cost taxpayers more than $1.4 trillion and are projected to increase the deficit significantly over the next 10 years, which does not satisfy my pledge that healthcare reform must be deficit neutral. 
 
One aspect of the bill that deserves particular scrutiny with respect to its long-term fiscal sustainability is the CLASS Act, contained in Subtitle D of H.R. 3962.  This section would create a new long-term care entitlement program, and would require individuals to pay into the plan for at least five years before they would be eligible to begin drawing benefits.  This payment structure severely skews the picture of the program's impact over the initial 10-year budget window, since the program begins collecting premiums in 2011 but does not start paying out benefits until 2016.  The Congressional Budget Office has stated that this program would increase the deficit in the long run, which is problematic given the long-term unfunded liabilities already faced by other entitlement programs like Medicare and Social Security.  From the standpoint of fiscal responsibility, it is essential that any new entitlement program be thoroughly reviewed and debated prior to enactment. I am deeply concerned about passing such a significant new program when it has not yet received the full consideration it deserves.
 
I also remain concerned that some of this bill's provisions may hurt small businesses and negatively impact job creation, which remains my top priority in Washington.  In speaking with numerous small-business owners across the First District, I repeatedly heard concerns that the small business carve-out in the employer mandate is not sufficiently flexible to protect certain small businesses.  Many employers also fear that the penalty provisions of this "pay-or-play" mandate would significantly raise the costs of hiring new workers, discouraging the creation of new jobs at a time when our economy desperately needs them.  The upper-income surtax included in the legislation would also affect the bottom line for some small businesses organized under the tax code as S-Corporations, further impacting these businesses' ability to reinvest and create jobs.  Furthermore, neither the surtax nor the payroll floor on the employer mandate are indexed for inflation, meaning that these revenue sources initially intended to capture only large businesses and wealthy individuals will, at some point in the future, inevitably threaten middle-class families and mom-and-pop employers.  We have already seen similar problems resulting from the Alternative Minimum Tax, which impacted only the wealthy at the time of its passage in 1969, but has increasingly threatened middle-class families in recent years because it is not indexed for inflation.   While I recognize and support the need for healthcare reform, I believe that reform can and must be funded by mechanisms and savings that do not threaten job creation or create inevitable long-term budget dilemmas.
 
While I could not support H.R. 3962 for the reasons discussed above, I remain fully committed to passing fair, effective, and fiscally sustainable healthcare reform.  With the debate now continuing in the United States Senate, I will continue to work with my colleagues in Washington in hopes of crafting a compromise that will effectively expand coverage, reduce costs, and increase access in rural areas without expanding our deficit or hurting small businesses.  I know there are some who will oppose any bill and any reform plan, but the stakes are too high to let obstructionists derail the debate.  While I did not feel that H.R. 3962 was a sustainable solution, we should all recognize that the status quo is not sustainable either.  Now is the time to set partisan rhetoric aside and work toward common-sense solutions that will rein in costs and expand coverage without adding to our unsustainable debt.
 
Please do not hesitate to contact me again in the future regarding issues that concern you. I believe that continuous communication with the residents of the First District is essential to helping me be an effective advocate for you in Congress. To stay informed, please visit my website at www.house.gov/kratovil.
 
Thank you again for contacting me and I look forward to hearing from you.

Sincerely,

Frank M. Kratovil, Jr.
Member of Congress