Is Obamacare Going to Work?
It is now a fact of life; the United States healthcare system will be reformed. With the Republican failures on Election Day, we now know Obamacare will take full effect in 2014. So, is it going to work?
We know it will raise taxes; in fact, the assertion from President Obama that he will not raise taxes on the middle class makes no sense; the tax increase on middle class families from Obamacare will be higher than going over the fiscal cliff. One wonders why President Obama is so worried about a recession from the fiscal cliff, but not from Obamacare? The tax increases under the fiscal cliff total around $600 billion; the tax increases under Obamacare total $700 billion, or more. This is all beside the point, because if Obamacare can save families money on insurance and medical costs, a tax increase may come out neutral on their bottom line. So the overwhelming question is the Affordable Care Act will be able to accomplish everything it is supposed to. The evidence says that this is a long shot.
Those who believe in the law point to the Canadian health system or the Swedish health system to prove that it will work. For starters, Obamacare is not a government healthcare system; it is a private system with Goliath amounts of regulation. Moreover, Patriotslog has noticed an interesting pattern with government healthcare systems: the larger the population of a nation, the less sustainable the system becomes; this is even becoming the case in Canada. For instance, to sustain the government healthcare system in Australia, France, or Britain taxes are over the 50% level (plus national sales taxes in many other nations). Have you ever wondered why the austerity measures in Greece and Spain are not fixing the debt issues? One would think that with all the pay cuts, pension cuts, and program freezes the debt issue would be well on its way out the door, but it is not, and healthcare is a major reason.
Healthcare will always take up a huge portion of a federal budget; this is why regular austerity cuts have not had the effect the people in Greece have expected. They continue to protests the deeper and deeper cuts to programs, pensions, and pay because cuts to these are not making as significant a difference as hoped for. We are not unique in the United States. Medicare and Medicaid alone take up over 21% of the federal budget–and this does not even include the expansion of Medicaid under Obamacare! Not to mention the fact that the United States does not even have a national healthcare system…at least not yet.
Most of the costs of Obamacare are expected to be paid for by the $716 billion in cuts to Medicare. If the government can find $716 billion in additional revenue we may not see taxes go up as steep as many suspect; but the question has to be asked: if the government can find $716 billion in cuts to Medicare, why have they waited until now to do it? There are only two possible answers: first, the President was not being honest when he said Medicare benefits would not be affected, or the government actually cannot make those cuts.
Patriotslog suggests it is a bit of both. President Obama has already made cuts to Medicare Advantage; are these cuts to “Medicare”? Not in the most strict interpretation. Medicare Advantage plans essentially replace Medicare parts A and B (which are technically the legal definition of Medicare), so the president has already shown he will disrupt benefits to many Medicare beneficiaries, though as long as he leaves part A and B benefits as they are he is not technically lying. Moreover, those who will have their Medicare benefits cut might just have the same benefits restored on Medicaid. Seniors benefits might not be affected because they will be shifted under the massive expansion of Medicaid.
Even all these cuts will not amount to the $716 billion in cuts the budget calls for. The remainder will be from cutting waste and fraud, and the amount doctors and hospitals are paid by the Medicare program. The government already expends so much effort to combat fraud and waste; does the president actually expect a sudden change in fraud and waste, or better policing against it simply because his law says so? I know politicians have egos, but that impressive narcissism. So we are left with cuts in payments to make up the rest of the cost. History shows this will not work. The government has attempted to cut payment amounts under the Medicare program 34 different times, and all have failed. Most of these actually resulted in higher costs. Moreover, a bill was also passed in the Clinton administration to cut physicians fees; Congress has subsequently passed a waiver of that bill every year since it was passed. Why?
If you cut the amount Medicare pays physicians they will stop accepting Medicare; ergo, Medicare becomes irrelevant. If Medicare is irrelevant it does not matter what we do to the benefits, because they cannot be used. The solution to this would be to force doctors, by law, to accept Medicare. This in turn would raise the cost of providing care for the rest of the nation. This is clear to Congress, which is why they pass the waiver each year.
Another aspect of Obamacare is to penalize employers who do not provide healthcare to their employees. With the cost to insure an employee running about $6000 per year, forcing an employer to take on this expense is an economic deadweight. An employer could pay the $2000 fine for not ensuring an employee, give the employee a $3000 per year raise, and still come out on top as compared to providing
insurance. This will push scores of thousands more onto the expanding Medicaid program, adding an additional expense to the government. The other consequence is that businesses can (and have said they plan to) push employees
down to part-time employment. Every person in the nation might have to have two jobs just to keep a 40 hour work week. Another popular idea among businesses is to lay off employees. If a company has 50 employees they have to pay a $40,000 fine for not providing insurance. This seems extreme, but there are already nearly 2.5 times as many businesses with 49 employees than there are with 50. This uncertainty is one of the biggest reasons the economy has been so slow in recovery. Companies have been sitting on their money; now that they know exactly the uphill battle that faces them, they will invest, and the economy will grow, but Obamacare certainly makes that hill a steeper incline.
So where is the government going to find the money to pay for all of this expansion of Medicaid given the unlikelihood of the government actually being able to cut $716 billion with their current plan? Taxes; lots of taxes. Mitt Romney may have been right when he called Obamacare the single largest tax increase in history; time will tell. One wonders if it would not simply be more efficient–particularly with the amount of taxes we will have to pay–to initiate a government healthcare system. Maybe that was the plan all along.
18 November, 2012
Posted on November 19, 2012, in Patriotslog Articles, Politics and tagged austerity measures, canadian health system, government, higher taxes, individual mandate, middle class families, Obamacare, Obamacare taxes, politics, united states healthcare system, universal healthcare. Bookmark the permalink. 2 Comments.