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Paying for Obamacare: Kicking the Can Down the Road to Future Generations

Posted By Kathryn Nix On June 4, 2010 @ 3:00 pm In Obamacare | Comments Disabled

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Health care reform was supposed to lower health care spending while expanding access for the uninsured.  Instead, though Obamacare will cost taxpayers trillions, it will do little to address the rising cost of care.  The government overhaul will not only have large and immediate negative effects for Americans of every ilk, but will have severe implications for future generations, amassing more federal debt to kick down the road to tomorrow’s taxpayers.  In a recent paper [2], Heritage expert James Capretta lays out the several ways in which Obamacare will add to, rather than reduce, federal deficits:

  • Omission of the “Doc Fix”: “The Obama Administration and leaders in Congress chose to use all of the tax hikes and spending cuts they could find to create another new entitlement instead of paying for a fix for Medicare physician fees.”  According to Capretta, the cost of the doc fix will fall between $250 and $400 billion over a decade.
  • Double-Counted CLASS Act Savings: The CLASS Act creates a long-term insurance program where enrollees must pay premiums for five years prior to receiving benefits.  Writes Capretta, “premiums paid by enrollees build a small surplus—about $70 billion over 10 years according to CBO—which the health law’s proponents claim as deficit reduction. But these premiums will be needed in short order to pay actual claims.”
  • Double-Counted (and Dubious) Medicare Cuts: Democrats claim that cuts to Medicare will increase the solvency of the program—but they simultaneously plan to use these cuts to pay for new entitlement programs. Capretta explains that “If the Medicare cuts and tax hikes for the hospital trust fund (about $400 billion over 10 years, according to CBO) are used solely to improve the capacity of the government to pay future Medicare claims, then the health law becomes a massive exercise in deficit spending.”
  • Underestimated Loss of Employer Coverage:  CBO estimates that just 3 million Americans will lose employer-sponsored insurance and receive coverage in the new exchanges instead, but because of new incentives for employers to dump coverage and pay a penalty in its case, the more likely effects are much more dramatic. Capretta cites a study by Douglas Holtz-Eakin and Cameron Smith of the American Action Forum, which predicts that as many as 35 million will lose employer coverage and receive subsidies instead, which would add to the cost of Obamacare by upwards of $400 billion over a decade.

The costs of Obamacare will supposedly be paid for through new taxes and spending cuts, many of which take the form of Medicare payment reductions to providers.  Because of the limitations these will put on Medicare enrollees access to doctors, they are unlikely to occur—and if they do, will reduce the quality of care that seniors receive.  As the cost of Obamacare grows as a result, future generations will be faced with the feat of paying for it—for real. To read more, click here [2].


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URL to article: http://blog.heritage.org/2010/06/04/paying-for-obamacare-kicking-the-can-down-the-road-to-future-generations/

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[1] Image: http://www.foundry.org/wp-content/uploads/Doctor_and_Patient090622.gif

[2] In a recent paper: http://www.heritage.org/Research/Reports/2010/06/Obamacare-Impact-on-Future-Generations

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