Health reform can be a complicated topic. Here are answers to some of the frequently asked questions about this most important issue.

Is health reform needed?

• We need to address the rising costs of health care and inefficiencies in the system. However, it is important the issues be approached in a thoughtful and fiscally responsible manner. Health care reform should build on what works, and fix what’s broken.
• A government-run plan won’t fix the health care system. It would decimate employer-sponsored health coverage, resulting in millions losing their current plan and being forced into a government-run plan.
• A government-run plan is fiscally reckless – leading to new taxes and a backdoor premium that will make health care costs higher, not lower.
• A government-run plan leads us down the road to total government control of our health, undermining employer-sponsored coverage. Government-run health care will mean provider shortages and more government bureaucracy.

How much will a government-run health plan cost?

• The high costs of proposed reforms and the government-run health plan make them fiscally reckless. Estimates on the cost of the bills, which are now in their final stages of negotiation, differ depending on who you ask. According to the Democratic leaders who crafted the bills, they cost around $900 billion. However, the actual cost of the legislation is probably more than $1.2 trillion.
• But, even those estimates don’t include the cost of health care for everyone without insurance – and the House’s H.R. 3962 would leave more than 18 million people uninsured.
• The costs of government-run health care are likely to balloon out of control. History tells us that government-run entitlement costs tend to quickly increase. Costs associated with Medicare, Medicaid and the State Children’s Health Insurance Program (SCHIP) consistently have outgrown the projections of state and federal budgets.

Are these costs sustainable?

Unless the costs of health care reforms and the government-run health plan are fully paid for by new taxes or other means, the consequences for the nation’s economy could be dire and long-term. Federal government spending is on track to drive the nation’s debt to over 100% of Gross Domestic Product by 2023 and past 200% of GDP by 2030 – even without the expensive health care reforms being proposed. Many economists believe that, generally, this level of spending is unsustainable.

How would the costs of a government-run health plan be covered?

To pay for the government-run plan, congressional leaders have been considering new taxes and reduced payments to health care providers. Proposals include:

• Taxing small businesses that do not or cannot afford to provide their employees with health insurance the equivalent of 8% of their payroll.
• Individuals with high-value health insurance plans (so-called “Cadillac plans will be taxed. However these plans are not just enjoyed by high income earners – many middle class Americans enjoy high-value benefits and will be faced with paying the tax.
• Employer pay-or-play requirements that could amount to as much as 8% of payroll, forcing employers to make a choice between providing health care they can’t afford or laying off employees.
• Taxes on individual income at fixed income levels which will hurt small business and, because the taxes are not indexed to inflation, cost the middle class hundreds of billions of dollars in the future. This new “surtax” would fall on a significant number of small businesses.

Some Members of Congress act as if there is no alternative solution to the health care crisis other than the creation of a government-run plan. Is that true?

Both Democratic and Republican members of Congress have offered alternative plans to solve the health care crisis that would not include the creation of an expensive, bureaucratic government-run option. Unfortunately, their ideas have garnered less attention. The U.S. Chamber of Commerce has outlined a plan that would actually help control costs and cover the uninsured without hiking taxes and government spending.

What impact will a government-run plan have on the current health care system?

• Experience with this type of plan in individual states suggests seeing a primary care provider will become more difficult as more patients enter a system that already does not have enough primary care providers.
• Other countries with government-run plans oversee care, create bureaucracies and underpay providers.
• When Hawaii created a public plan for children in the state, it went bankrupt almost immediately.

How will a government-run plan affect those in the health system who have private insurance?

• A government-run plan would decimate the health coverage which employers currently voluntarily provide to 160 million Americans. Many of those covered by employer-sponsored insurance could be forced into a government-run plan as private employer-sponsored plans get “squeezed out.”
• Research shows that eight in 10 American workers are satisfied with their employer-provided health care.
• A government-run health insurance plan is the first step toward a government take-over of health care similar to Europe and Canada, with shortages of medical providers and more government bureaucracy.
• If private insurance remains available, health care providers will be shifting costs to the private plans, making health care costs for those people with private plans higher. Legislators are proposing reducing Medicare and Medicaid payments to physicians and hospitals by hundreds of billions of dollars.

What does it mean to be “squeezed out” or “crowded out” of private insurance?

• A government-run plan with unrivaled power to negotiate for lower-cost health services – and able to set prices at levels not sustainable in private business – could put private insurers out of business, leaving people willing to pay for private insurance with no other options than government-run health care.
• Millions of lower-wage workers could drop their employer-provided insurance because, with proposed government subsidies, it would likely be cheaper to buy insurance on the open market than pay the premiums of employers’ plans. Some companies could find it no longer cost effective to offer insurance as many employees drop out.

How will government-run health insurance impact my employer and my job?

• Business that cannot afford to pay their employees’ health insurance premiums (in accordance with the guidelines mandated by the government) will be faced with paying fees which could put businesses in the tough position of having to cut jobs or delay plans for growth in order to pay the health care tax.
• Additionally, many small businesses that earn above a certain income level will be hit with a surtax on their income. Though this tax will not hit all small businesses at first, it is not indexed to inflation, and, over time, more and more small businesses will be hit by the tax, causing them to delay growth and hire fewer workers.