Even Supporters Don’t Believe Hype On ObamaCare

Supporting this round of “healthcare reform,” amounting to little more than a government assumption of central authority, is an ideological commitment. It has little to do with covering everybody, balancing the budget, creating jobs, or doing what is best for the country… it’s merely a push to remake the country in accordance with the belief that the government knows what is best for us.

Even many who think we SHOULD have a system of universal coverage aren’t kidding themselves about the other aspects of the bills currently being considered in Congress.
http://www.newyorker.com/online/blogs/johncassidy/2009/11/some-vaguely-heretical-thoughts-on-health-care-reform.html#entry-more

So what does it all add up to? The U.S. government is making a costly and open-ended commitment to help provide health coverage for the vast majority of its citizens. I support this commitment, and I think the federal government’s spending priorities should be altered to make it happen. But let’s not pretend that it isn’t a big deal, or that it will be self-financing, or that it will work out exactly as planned. It won’t.

Many Democratic insiders know all this, or most of it. What is really unfolding, I suspect, is the scenario that many conservatives feared. The Obama Administration, like the Bush Administration before it (and many other Administrations before that) is creating a new entitlement program, which, once established, will be virtually impossible to rescind. At some point in the future, the fiscal consequences of the reform will have to be dealt with in a more meaningful way, but by then the principle of (near) universal coverage will be well established. Even a twenty-first-century Ronald Reagan will have great difficult overturning it.

Keep in mind, this is being written by somebody who thinks the legislation should pass. So what does he have to say about the “budget saving” PresBo and company are telling us about?

Let’s remind ourselves of the basics. There are two big (and linked) problems with the current health-care system. It excludes 46.3 million Americans, according to the Census Bureau, and it is inordinately expensive. The proposed reform purports to tackle both of these problems; in fact, it only addresses the first one in any systematic manner. The future cost savings that the Administration and its congressional allies are promising to deliver are based on wishful thinking and sleight of hand. Over time, the reform, as proposed, would almost certainly add substantially to the budget deficit, thereby worsening the long-term fiscal crisis that the country faces. Financing this measure alone wouldn’t break the U.S. Treasury. Other elements of the fiscal picture, such as the looming increases in interest payments on the national debt and an explosive growth in Medicare spending as the baby boomers retire—are far larger. But the numbers involved in health-care reform are still significant—perhaps one per cent of annual G.D.P.

As for believing the administration’s blasé assurances that the fiscal impact will be positive, the author just doesn’t trust the numbers.

According to the C.B.O., in summary, many more people will, with government assistance, buy private insurance coverage (some twenty-one million) and many others (about fifteen million) will become newly eligible for Medicaid, which is wholly financed by the taxpayer. Surely, this will cost considerable sums of money and add to the deficit. Or will it? The Democrat-controlled C.B.O. says that the Pelosi plan will actually reduce the deficit by a hundred and four billion dollars between 2010 and 2019, thereby satisfying President Obama’s claim that the reform will be deficit neutral. Furthermore, the C.B.O. suggests that the legislation’s impact on the deficit will continue to be negative in the following decade, from 2019 to 2029. I wish I could believe these figures, but I don’t.

Two large items underpin the Administration’s math: five hundred and seventy-two billion dollars of tax increases over ten years, and roughly the same amount of cost savings on Medicare and other existing government health programs. Most of the revenue increase would come from levying a 5.4 per cent surcharge on Americans individuals who earn more than five hundred thousand dollars a year and joint filers that earn more than a million dollars. I am a big supporter of progressive taxation, but at some point it becomes politically unsustainable. If health-care reform goes through, and the Bush tax cuts expire in 2011, top earners will face a marginal tax rate of forty-five per cent at the federal level. Add in state and local taxes, plus Social Security and Medicare payments, and wealthy people in New York, say, would be facing tax rates of about sixty per cent. As sure as night follows day, this would generate more tax evasion and a political backlash. Without a doubt, the next Republican-controlled Congress would reverse the changes.

I would like to repeat, the above statements are from a SUPPORTER of ObamaCare who thinks the bill should pass. Of course, he also makes the case that it’s okay for PresBo and Congress to lie to us about it…

That takes me back to where I began. Both in terms of the political calculus of the Democratic Party, and in terms of making the United States a more equitable society, expanding health-care coverage now and worrying later about its long-term consequences is an eminently defensible strategy. Putting on my amateur historian’s cap, I might even claim that some subterfuge is historically necessary to get great reforms enacted. But as an economics reporter and commentator, I feel obliged to put on my green eyeshade and count the dollars.

Fiscally speaking, this plan is a disaster and will cause us fiscal problems for decades to come… if not forever. This may be why supporters like to dwell on our “responsibility” and their assertion that health care is a “right” to which all are entitled… because when they try to defend this fiscally disastrous policy they have to lie to make things sound better than they are.