Taxing Details That Harm Patients

A new levy on Medicare Advantage plans would hurt lower-income seniors the most.

By BOB DOLE

While rushing to save a patient, a physician's first responsibility is to "do no harm." That requires remembering that sometimes a treatment can make things worse. And so it should be with the health-care reform moving through Congress. Clearly this issue is too big and too important to ignore. For America's sake, reform needs to happen. But it's also too complex an issue to rush a treatment with details that might cause harm.
Most of us agree that America's health-care system needs to be fixed. Families and businesses are struggling to keep pace with soaring costs. Too many Americans are without adequate coverage. And all of this is damaging our economy. But it will do no good to reform the system if it ends up degrading the quality of care most of us currently receive or saddling future generations of Americans with unconscionable debt.
As always, the devil is in the details, and we'd better be paying very close attention to their rich potential for unintended consequences. For example, one provision in the Senate's version of health-care reform would impose a new tax on a number of federally-funded health-care benefits.
In effect, the federal government would be taxing the money it provides for Medicare and a host of other important programs. By so doing, it would unintentionally jeopardize the quality of care that many of our oldest, sickest and most vulnerable citizens depend on.

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The Senate legislation imposes this yearly premium tax on for-profit and not-for-profit health plans, generating an estimated $60 billion in tax revenues over its first nine years. Government-run programs would be exempt from the tax. However, the tax would be levied on Medicare, the Children's Health Insurance Program, Medicaid, and Tri-Care for the families of military dependents when delivered by a private-sector plan.
Large private-sector health plans offering a diverse line of products would likely recover the cost of the tax by raising premiums on their other products.
But for those health plans specializing in Medicare, Medicaid and other government programs, there would be no such option. These providers are strictly bound by federal contracts and frequently operate at or near cost, serving America's older, higher-risk and higher-cost patient populations. Since they have no profits with which to absorb the tax or any ability to pass it on, they'll have only one option—to reduce the health-care services they provide. Certainly this isn't what the Senate intends.
Nonetheless, some 10.2 million Americans who now choose to purchase Medicare Advantage through private providers because it gives them better benefits at lower cost may be hurt. These are frequently lower-income elderly people with a multitude of serious health problems. The services they receive allow many of them to remain in their homes close to friends and family during their final years, rather than be moved into nursing homes where their care would be far more expensive and their days much emptier. They would be among the victims of this new federal tax.
What kind of Americans are we talking about? Here are a few real examples: An 89-year-old woman who lives alone recovering from a mastectomy, who has osteoarthritis, glaucoma and degenerative joint disease. An 81-year-old gentleman living in his daughter's home who has bone, liver and bladder cancer. An elderly couple where the wife has trouble walking because of arthritis, while the husband suffers from Alzheimer's requiring 24-hour care. These are the kind of people health-care reform should be helping, not hurting. Extending benefits to some Americans by cutting care for others isn't reform—it's unfair.
Fixing our nation's health-care system is a historic undertaking. As Congress works toward a solution, I encourage my former colleagues to pay very close attention to the details and be mindful of the unintended consequences of what they do today, because the impact of their decisions will be with us for generations. A treatment that leaves the system in worse shape isn't a cure.
Mr. Dole, a former Senate majority leader, was the 1996 Republican nominee for president. He is a founding advisory board member of the nonprofit Bipartisan Policy Center, which is working for principled compromise on health care and other issues. His firm, Alston & Bird, represents a range of health-care organizations.