NCPA - National Center for Policy Analysis

OBAMACARE: ALL PAIN, NO GAIN

April 2, 2010

Arguably the most important issue in the health care reform debate on Capitol Hill relates to the budget: How much will this reform cost?  Will it add to the deficit?  Or reduce it?  Americans were also told "If you like the plan you are in, you can keep it."  But that is a promise politicians cannot keep, and poll after poll has shown the public is not buying the official estimates -- nor should they, says John C. Goodman, President, CEO and the Kellye Wright Fellow of the National Center for Policy Analysis. 

Historically, medical prices have risen at three times the rate of inflation.  Obamacare will require just about every nonelderly person in America to buy health insurance.  The cost of this coverage is going to rise at twice the rate of growth of families' incomes, says Goodman. 

At the same time, the legislation will prevent people from all of the natural adjustments you would expect in the face of rising premiums.  For example: 

  • They will not be allowed to scale back insurance or choose more limited coverage.
  • They won't be allowed to shift to catastrophic-only plans or rely more on cost-saving self-insurance through Health Savings Accounts. 

We won't have to wait years to begin feeling the pain of Obamacare, says Goodman: 

  • The 10 percent tax on tanning salons starts this year.
  • Beginning in 2011 our drug bills will rise because of a $2.5 billion tax on name-brand drugs and removal of the tax exemption for over-the-counter drugs purchased using a Flexible Spending Account.
  • The penalty for nonmedical Health Savings Account (HSA) distributions will also double. 

Seniors will begin losing benefits as a result of cuts in the Medicare program, says Goodman: 

  • The average Medicare Advantage Plan enrollee will lose nearly $200 in benefits in 2011--rising by a dozen times that amount ($2,437) by 2019.
  • Seniors in traditional Medicare plans will lose only $22 in 2011, but this will rise to $1,137 by 2019. 

Policymakers need to accept the fact that we are on an unsustainable spending path.  Creating these new implicit entitlements for non-seniors and pretending they are paid for by unserious budget gimmicks will only make our problems worse, says Goodman. 

Source: John Goodman, "Obamacare: All Pain, No Gain," Heartland Institute, April 1, 2010.

 

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