Obamacare Won't Hold Down Costs

COMMENTARY Health Care Reform

Obamacare Won't Hold Down Costs

Nov 10, 2010 3 min read
Nina Owcharenko Schaefer

Director, Center for Health and Welfare Policy

Nina Owcharenko Schaefer is well known as a champion of patient choice and robust competition in America’s health insurance markets.

"We'd be misreading the election if we thought the American people want to see us … relitigate arguments that we had over the last two years." So President Obama claimed the day after his party suffered an electoral defeat of historic proportions.

Call it "spin" or denial, wishful thinking or whistling past the graveyard — anything but a sober analysis. Because one thing the election made quite clear was that the American people didn't like the way Congress had been "litigating" for the past two years.

One of the biggest sore spots was passage of the Patient Protection and Affordable Care Act, or Obamacare. The 2,700-page piece of legislation portends a massive transfer of power, dollars and decision making to the federal government. Yet for all that, the new law falls short of delivering the benefits promised by proponents as they rammed it through Congress.

For example, it has become increasingly clear that the approach won't "bend the cost curve" to make health insurance and health services more affordable. Last week, the AARP, one of the main supporters of the bill, announced it would be shifting more health care costs to its employees, in part because of Obamacare.

Nor will the Obamacare model give people the kind of "choice" they envisioned. Indeed, most of those slated to gain coverage under the law will be herded into Medicaid, the welfare program for the poor. Others will be coerced into mandated exchanges to buy federally approved health plans.

Finally, despite the president's repeated promises, the new law won't allow a vast number of Americans to keep the coverage they are happy with right now.

Beyond failing to fulfill these promised goals, the poorly constructed legislation will have far-reaching consequences on the economy and the health care system at large.

Businesses face increased costs from Obamacare as they struggle to meet disruptive employer mandates, accommodate new taxes on insurance, drugs, medical devices, and investment, and comply with piles of federal agency regulations and Internal Revenue Service paperwork.

Senior citizens will also have to cope with changes as a result of the new law. Deep cuts to private Medicare Advantage options alone will cause 7.4 million seniors to lose current coverage.

Physicians lose, too. Obamacare did not fix the Medicare physician payment formula, so doctors face a 23 percent payment cut next month. And the Obamacare-swollen rolls of people dependent on Medicaid — which pay doctors less they get than treating the privately insured — will test the willingness of many doctors, especially specialists, to continue to participate in these government-run health care programs.

Federal taxpayers will be among the biggest losers under Obamacare. The new law adds a trillion dollars in new federal spending and creates two prohibitively expensive new entitlements for long-term care and insurance. The new law also imposes about a half-trillion dollars in new taxes over the next decade, which fall heavily on the middle-class. All this on top of likely premium increases many families will face.

The fight against Obamacare has already begun on one front. Twenty-one states are suing the federal government, arguing that Obamacare's commands that states expand their Medicaid programs, set up federally designed health insurance exchanges and require individuals to buy insurance or suffer penalties are flatly unconstitutional.

The next Congress must battle to repeal the new law, focus on its consequences and failures, withhold funding and block its implementation at every opportunity.

After Congress repeals Obamacare, it should thoughtfully consider a number of practical adjustments that will permit the free market to furnish Americans with truly affordable, effective health care insurance choices. For example:

• Congress should provide tax relief for individual taxpayers who purchase health care coverage on their own.

• They should redirect health care spending under Medicaid and the State Children's Health Insurance Program to help low-income families and individuals purchase private health insurance.

• And they should work with the states to undertake reforms that will increase the portability of private health coverage, allowing consumers who like their current coverage to keep it, even if they change jobs.

The American people never got a chance to "litigate" Obamacare in the last Congress. Instead, then-House Speaker Nancy Pelosi informed her colleagues they'd just "have to pass the bill to find out what's in it."

Now that the American people know what's in it, they want something very different: Reforms that will improve the health care system, not make it worse. That will require overturning Obamacare and starting over in a new direction.

Nina Owcharenko is director of the Heritage Foundation's Center for Health Policy Studies.

First appeared in The Washington Times

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