PrintJune 9, 2009
Obama Care: Robbing From Peter to Pay Paul
President Obama is committed to fixing health care. He wants to make health care affordable for all Americans. In much the same way, Barney Frank and company wanted to make houses affordable for all Americans -- and we know how well that idea turned out. Mr. Obama has wisely offered more than $600 billion dollars as a deposit for his idea. Yes, he has frugally set aside money he does not have. He has borrowed money he can never hope to repay, perhaps printed money as well, as a deposit toward his idea, or more precisely his ideology.
Even President Obama himself admits that the debt is unsustainable. Even without further spending on remaking health care, Obamanomics will pile up almost $10 trillion in deficits over the next decade. Mr. Obama himself complained that health care costs had doubled over the preceding 8 years, rising 3.7 times faster than wages. Yet with wages decreasing by 1.8% last year, he tripled the deficit in less than 90 days in office, with a yearly rate of rise exponentially higher than that of wages.
U.S. health care costs were $2.4 trillion in 2008, or 17% of Gross Domestic Product (GDP). Over the next decade this is expected to rise to 20% of GDP. According to the numbers most often cited by Obama, 45 million people are without health care. Let us be clear, even if that number were correct regarding health insurance coverage, there is a difference between the number of persons without health insurance and those without health care. Emergency departments and hospitals by law must provide unreimbursed care for all comers, uninsured Americans as well as illegal aliens (in liberal speak, undocumented residents). While many people are uninsured for short periods of time, the number of chronically uninsured in reality is much lower, between 9 and 13 million. Around 17% of "uninsured" Americans lived in households with incomes above $75,000 per year and could presumably afford insurance. Additionally, 14 million of those listed as uninsured were eligible for Medicare or Medicaid, about the same number as chronically uninsured. It is worth noting that to cover only these people at Medicare rates Obama's "deposit" would last for nearly 6 years, but without the far reaching dependence on government programs he needs to further his policies. Additionally, his assertions that health care costs are a major cause of bankruptcy are an outright lie.
As a matter of ideology, Mr. Obama wants to provide government health insurance to at least 45 million more Americans, the majority of whom do not need it. However, they will surely avail themselves of it because it will undoubtedly be less expensive, initially, than other health insurance policies. So, the people in the households earning $75,000 yearly will jump on board. Since Obama care will compete directly with private insurance, many other people in this group of the "poor" uninsured will as well.
Remember that Medicare does not provide health insurance only for poor retirees, but for wealthy ones as well. Warren Buffet is eligible for Medicare. Once Obama succeeds in starting another entitlement program and in driving private health insurance out of business, he can raise taxes to any level necessary since he will have done away with the competition. Whatever happened to the government protecting us from monopolies? Oh, yes, that did not include government monopolies.
Let's look at the cost of a Medicare or Medicaid like program for 45 million Americans. For the sake of argument, let's assume that another 15 million will join Obama care. Obama has also proposed cuts in Medicare to pay for his "Medicare II". Talk about robbing Peter to pay Paul! The taxpayer cost of Medicare was $391 billion to cover 43 million people and costs are expected to grow by nearly 8% per year. With the inclusion of out of pocket expenses, the total cost of Medicare, not counting the billions it costs each year in punitive regulations and cost shifting, was around $536.4 billion.
The same program today for 60 million people would cost $715.2 billion yearly, or 30% of the health care costs for 20% of the population. At the end of eight years, the number of years during which health care doubled as noted by Obama, costs would be $1,323.4 trillion, or nearly double. True, Medicare covers older Americans, but the cost to implement his program has not been taken into account and the growth of the program will undoubtedly be faster than projected, given the history of all other government entitlement programs.
Perhaps at some point it will include providing cars to the uninsured to enable them to get to the doctors' office and perhaps free food to help keep them healthy. Oops, I forgot, we already do that, but we certainly can expand these programs. The point is that Obama's plan will do nothing to stem the rising cost of health care because government, directly or indirectly, is the cause of much of that rising cost.
President Obama now wants to raise taxes on health insurance benefits in order to pay for health insurance benefits! He truly is robbing Peter to pay Paul. We do need to reform health care coverage. However, this can be done utilizing private health insurance in a much more affordable and sustainable way, without creating increased dependence on the federal government. The health care systems of Switzerland and Holland are interesting option[TL1] s. The Swiss system covers 99% of the population for 11.6% of GDP. Health insurance is private, but the government subsidizes the cost for those who are unable to afford the premiums. Since each citizen has some financial responsibility, there is an incentive to prevent cost escalation. Best of all, the government and hence the taxpayers pay about 25% of health care costs as opposed to over 45% in the U.S. The Dutch system is similar. Insurance companies offer a mandatory basic package with optional upgrades. No health care system is perfect, but Obama Care will be catastrophic and will bankrupt the nation.
Frank S. Rosenbloom, M.D. President of Oregon Right to Life. He blogs at summacontraprobus.blogspot.com/
