Stimulating welfare : rockymountainnews.com

It would be bad enough if the $800 billion-plus stimulus package - which could pass the Senate today - merely added hundreds of billions of dollars to the federal deficit while offering few incentives to spur long-term growth.

But it's worse than that. The bill threatens even greater damage to the nation's fiscal health by expanding health-care entitlements. These new obligations would saddle future taxpayers with untold costs, potentially making millions of Americans - even those recently earning six-figure salaries - eligible for taxpayer subsidies.

They're also a stealthy way to give Washington much greater control over health care, as The New York Times reported, "with little public notice and no public hearings."

Several provisions in the stimulus package would immediately grow the welfare state. One would make Medicaid, the federal health program for the indigent, available to anyone who's unemployed - former millionaire CEOs and laid-off retail workers alike. Another measure would, for the first time, provide taxpayer subsidies under the COBRA health-insurance law.

Either of these proposals would undermine individual responsibility, allowing people who can afford to pay for medical insurance from their own pockets to collect taxpayer subsidies.

Under the Medicaid provision, any worker receiving unemployment benefits could sign up for Medicaid without satisfying an income or asset test. The federal government would pay all of the costs of these new enrollees until the end of next year.

Since Colorado's fee-for-service version of Medicaid charges patients no more than $10 a day for hospital stays, $3 for outpatient services and $3 for brand-name prescription drugs, out-of-work Coloradans with significant savings and assets might find the lure of taxpayer-subsidized health care irresistible.

Next, people who lose their jobs but want to maintain medical coverage under the 1986 COBRA law would for the first time win taxpayer subsidies.

COBRA lets unemployed workers stay in their employer-provided medical plan for either 18 months or 36 months. For many people who have ongoing medical conditions or dependents who don't have access to other medical insurance, COBRA provides continuing care during periods of unemployment.

The catch: The employee must pay the entire premium, and in many cases, an additional 2 percent administrative charge.

This is actually no bargain for businesses, because COBRA enrollees cost more to insure than typical workers. The U.S. Chamber of Commerce reports that it costs companies 45 percent more to cover former workers under COBRA than it does to pay insurance costs for current employees.

The stimulus bill would have taxpayers pick up 65 percent of COBRA premiums for one year - again, while imposing no means test. As with the bill's new Medicaid perk, high-income people who lose their jobs will have little incentive to purchase insurance on their own.

Should the downturn continue, Congress will face heavy pressures to maintain these subsidies for much longer than one year.

Entitlement programs, even those launched as temporary measures, are nearly impossible to shrink or eliminate once they've taken hold.

These provisions could transform the government's role in health-care finance. They should be publicly and deliberately debated, not buried inside legislation that is rushing through Congress and is intended to accomplish other goals.

Stimulating welfare

Bill would dramatically expand health-care entitlements