Now that the Patient Protection and Affordable Care Act (or “Obamacare”) is law, “what is in it” is revealed by 3,256 pages of legislative text, including the 858 pages of the reconciliation bill (as printed at my local library).
Most of the bill’s provisions, except its tax increases, do not go into effect until 2014. So what follows is like a visit from the ghost of Christmas Future—shadows of what will be, but do not have to be, if we will change it.
In my appraisal of the law, I arrived at ten principal findings.
1. Government Takeover of Health Care.
Obamacare authorizes an astonishing expansion of government authority over doctors, hospitals, insurers, employers, and individuals. It creates more than 150 new bureaucracies, agencies, boards, commissions, and programs to rule over health care in the United States. Government authorities are empowered to tell doctors and hospitals what is quality health care and what is not, what are best practices in medicine, how their medical practices should be structured, and what they will be paid and when.
Government authorities will mandate exactly what health insurance with what benefits workers and employers must buy, and the Act imposes tax penalties on them if they do not comply. Government authorities will dictate to insurance companies exactly what health insurance they must sell, to whom they must sell it, and what they can charge. Obamacare even redistributes premium income among insurers under a new “risk adjustment” mechanism.
This adds up to nothing short of a government takeover of health care.
2. Soaring Health Care Costs.
Despite Obamacare’s promise of making health care more affordable, the increased regulations, “free” benefits, and guaranteed coverage for various groups will cause health insurance rates to rise sharply, simply so insurers will have the funds to pay promised benefits. Demand for health care services will rise due to the incentives from third-party payment for health care by insurers and the government, while the supply is reduced by constraining the payment for services and through other disincentives. That is a prescription for soaring health care costs.
3. Government Health Care Rationing.
Obamacare attempts to anticipate and prevent rising health care costs by giving government the authority to ration care. This begins by constraining the resources going to doctors and hospitals through nearly $3 trillion in Medicare cuts over the first 20 years. A new, democratically unaccountable Independent Medicare Advisory Board is created with authority to adopt still more Medicare cuts.
Payment practices adopted by Medicare will be copied by private insurers, spreading the impact throughout the entire health care system. The Act creates financial incentives for doctors and hospitals to deny health care, contrary to the interests of their patients. Government authorities will use their new power over payments to doctors and hospitals to favor those who follow their rationing dictates.
These constrained resources will decimate incentives for investment in health care facilities such as hospitals and clinics, and in the provision of current technologies and services. Already we have seen the cancellation of 60 proposed new doctor-owned hospitals across the country because of new burdens imposed by the legislation. This means less access for Americans to advanced medical technologies such as MRIs and CT scans.
4. Short-circuiting Innovation.
Obamacare also will discourage private investment in the development of new medical technologies and drugs. Politicians will use limited resources to keep popular services free or nearly free and copayments low, diverting funds from research and development where social benefits are longer-term and more difficult to see.
As investment in health care technology declines, Americans will lose access to new innovations that modern medical science could support, such as gene therapies and biotechnologies.
All of this rationing will get worse over time, as rising costs force government to constrain health care resources even further. We see this already in Massachusetts, which adopted the essentials of Obamacare in 2006.
5. Higher Taxes.
Obamacare imposes new taxes and increases tax rates starting in 2011, adding up to $500 billion over the first ten years. Some of these tax increases will add further to rising higher health insurance premiums and higher health costs as they are passed through to patients.
Even with the new entitlement subsidies in the Act, buying the required high-cost insurance will be like a new payroll tax on working people, from 2.8 percent at lower incomes up to almost 10 percent on everyone making more than 200 percent of poverty (about $44,000 for a family of four).
The penalty for not complying with the individual mandate is $695 per person in a family, up to a maximum of $2,085 a year. That applies to everyone regardless of income. These new taxes violate candidate Obama’s pledge in 2008 not to raise taxes on anyone making less than $250,000 per year.
6. Runaway Government Spending.
Even though we cannot remotely afford all of the entitlement promises we already have made through Social Security, Medicare, and Medicaid, Obamacare sharply expands Medicaid and creates a massive new health insurance entitlement subsidy program. The Congressional Budget Office (CBO) reports the Act will increase federal spending by almost $1 trillion over the first ten years. Over the first ten years of full implementation, starting the clock in 2014, the Act involves $2.4 trillion in increased spending, making it the most expensive legislation ever approved by Congress and signed by a president.
As all the effects of the legislation play out, actual spending will be much higher.
7. Higher Federal Budget Deficits.
President Obama barnstormed the country insisting Obamacare would reduce federal deficits, based on a CBO score. But he did not tell us the CBO score assumed $2.9 trillion in Medicare cuts over the first 20 years, which is highly unlikely to occur and, if it did, would create chaos in health care for seniors.
More realistic forecasts show Obamacare would add between $2 trillion and $3 trillion, perhaps more, to the national debt over the next 20 years. It is not exaggerating to say Obamacare could bankrupt the nation.
8. Lower Quality Care.
The American people currently enjoy the most technologically advanced and highest quality health care in the world. Many Americans are alive today only because of this high-quality health care. This is a central component of the traditional high standard of living in the United States.
Obamacare will sharply reduce the quality of care, particularly for the most vulnerable, such as premature babies, the elderly, and those suffering from cancer or heart disease. The authors of the Act promised “health care for all,” but in fact the new system will institutionalize a rationing system that will deny health care to the sickest and those who need it most.
9. Slashing Jobs, Wages, and Economic Growth.
Although President Obama repeatedly claimed Obamacare was essential to restoring long-term economic growth, the Act will have the opposite effect, slashing jobs, wages, and long-term growth. That will be the effect of the employer mandate and the increased taxes under the Act on investment