• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Obamacare Is Not Entitlement Reform

    Entitlements will Consume All Tax Revenue by 2052

    The United States faces financial collapse due to out-of-control government spending, and entitlement programs have a lot to do with it. Washington has promised more than it could ever possibly deliver.

    Medicare in particular puts the government on the hook for $38 trillion in long-term unfunded liabilities, and reform to address this is sorely needed. Change must address not only spending but also the system by which the program operates, which currently encourages inefficient use of health services. This trend has penetrated the health care system at large.

    According to the Obama Administration, the health care overhaul passed in March addressed the need for entitlement reform. However, at a recent event hosted by the Galen Institute, expert James Capretta introduced his research that shows that this is not the case.

    Peter Orszag, Director of the Office of Management and Budget, identified the main driver of increased spending in Medicare as soaring costs in the health care system at large. This argument was used to claim that Obamacare would “bend the cost curve,” reducing federal commitments and overall health spending.

    But Capretta points out that the Administration was incorrect in this assessment. He writes that “CBO’s long-term budget projections from last year show that before enactment of the health law, population aging would be responsible for at least 56 percent of the spending growth for the major entitlement programs between now and 2035, and rising health care costs would account for just 32 percent of the cost growth.”

    Obamacare ignores the issue at the heart of growing Medicare expenses: an increasing population of senior citizens eligible for Medicare’s benefits. What’s more, the new law will not even really address the problem that it sought to solve. The main issues with Medicare’s high costs arise from its fee-for-service payment system, which gives doctors and patients little incentive to control cost. Obamacare addresses this through top-down delivery system reform, which will have dubious effects on controlling costs.

    Capretta explains that “there is nearly half a century of experience with the Medicare program indicating that confidence in ‘government-engineered’ efficiency improvement is entirely misplaced. Efforts to control costs from the top-down have always devolved into price setting and across-the-board payment-rate reductions, which is detrimental to the quality of American medicine. Price controls drive out willing suppliers of services, after which the only way to balance supply and demand is with waiting lists.”

    Instead, Congress should reform Medicare by overhauling the current system and replacing it with one where cost control works from the bottom up. Congressman Paul Ryan’s (R–WI) “Roadmap for America’s Future” provides an example where consumers would make choices that rewarded providers for offering better quality care at lower prices. This would encourage greater productivity that would extend throughout the entire health care system.

    The good news is that lawmakers on both sides of the aisle have displayed awareness that it is not high costs in health care that make Medicare so costly but rather Medicare itself, which drives cost trends within the overall health care system. The next step is to repeal the top-down approach taken in Obamacare and replace it with a consumer-driven approach that provides better value at a lower price.

    Posted in Obamacare [slideshow_deploy]

    6 Responses to Obamacare Is Not Entitlement Reform

    1. Billie says:

      Important issue to realize what it also isn't, is right. The future of America is crystal with this leadership. The deliberate collapse of the successes of this country to force people into socialism, removing the freedom to live independently.

      As he extends unemployment benefits (and without the money to sustain it) at the same time, increasing the unemployment status, by destroying the gulf, irrational mandates and unfair taxes, impositions of government rules for: the impossible to conduct private business that increases employment. Health care take-over, with the force of obamacare corruption. Increasing government needlessly…etc., etc., etc., who's going to step in and do what's right? Please, stop this preventative illness. He won't do what's of, for and by the people which makes him a failure to the leadership of this country.

    2. Johann Wolfgang von says:

      All spending bills must originate in the House of Representatives…. US Constitution

      If conservatives in both parties can control the house after the November elections they can begin to repeal this reckless spending by simply voting to de-fund the plans, and then dismantle them piece meal with a 2/3rds majority to over ride a Presidential veto, if the majority isn't present the conservatives can wait until a President is elected that will sign the bills, nothing in DC will move without being paid!

      BTW there is an interesting popular review of the process of state's rights including "nullification" and historically it has been used to even nullify Supreme Court rulings (see Fugitive Save Act and New England compliance).

    3. Concerned, Mequon WI says:

      Personally I think this whole admistration is a failure. The more we pay out for unemployment the more we move toward a socialistic society…and that is exactly what Obama wants. Why should people work or look for a job if they don't have to? Unfortunately I know several people who do this. They have been let go from their jobs – they aren't looking for a job because they plan to collect unemployment until it runs out…then they'll look for a job.

    4. Lynn Bryant DeSpain says:

      One can call a "Rabid Dog" by many names, and make many reasons for its existence. However, ultimately there is only one cure for that infected dog, and there is no medicine.

    5. Jeanne Stotler, Wood says:

      Let's get it straight for once, Medicare is NOT FREE, every week an amount was taken from my check as was Social security. Now I am ret. and I have money subtracted for having Part B, after that, I pay, every month almost $200 more for a supplement policy and both go up every year. Now Medicaid is different, it covers those who cannot afford Ins. BUT there is a lot of fraud, as there is in Food stamps. A few weeks ago I saw an Iraqi woman with a FS card and WIC pushing a $200 stroller. As a nurse, I am for medical care for all, just not this Obamacare, and I am not for people sitting on their butts collecting money while the rest of us work ours off. The SChp program for children is great, but it also needs to be looked at, if you can afford 2 cars, and other perks, then put you kid on your insurance. There are just too many trying to take advantage of the rest of us.

    6. Drew Page, IL says:

      Perhaps, for the sake of argument, it would be helpful to come up with a working definition of "entitlement programs". Programs like Medicaid, food stamps, rent subsidies, free public education of children of illegal aliens, free treatments of illegal aliens in hospital emergency rooms and welfare payments are being lumped in with programs like Social Security, Medicare and Unemployment Compensation.

      Social Security, Medicare and Unemployment Compensation are basically federal insurance programs that working people purchase, through taxes, from the government. You buy the insurance and collect the benefits, if an when you meet the eligibility requirements. When you buy health insurance from an insurance company, I don't think it's fair to call that an "entitlement program".

      Programs like welfare, give money year after year to those who don't do a thing to earn it and never paid a dime of federal income tax. There are generations of people living on welfare that have never worked a day in their lives and the more kids they have, the more money they get. It's a known fact that nearly 50% of adults in this country pay no federal income tax. Who do you think people in that 50% are going to vote for, someone who promises more freebies, or someone who someone who says "no more"?

      I am sick to death of hearing how "Entitlement Programs" like Social Security and Medicare are bankrupting the country. There was nothing wrong with the way these plans were set up. What went wrong is that cowardly politicians from both parties stole billions, if not trillions, of dollars over the decades to finance other things that they never told the public about, and left IOUs for posterity to pay off. Over and over again, the funds paid into Social Security and Medicare by hundreds of millions of people (and their employers) year after year — all of which were supposed to bwe kept in a LOCK BOX and used only to pay benefits to those who were eligible — stolen by cowardly politicians to pay for other things never included in the Federal Budget.

      Where, I wonder, are the written procedures, rules and authorizations that explain how, when and by whom Social Security and Medicare funding may be used for other purposes? Don't tell us Social Security is broke. Tell us the truth; Social Security has been robbed.

      You want to cut "entitlements"? Discontinue welfare payments to able-bodied people and quit subsidizing ILLEGAL ALIENS and their families. They are not citizens and are entitled to nothing but a free ride back home.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×