ALEXANDRIA, Va. — President Obama says we can’t afford not to pass health reform, even as our economy faces its biggest challenges in decades.
So far this year, his stimulus legislation has pumped an additional $150-billion into our $2.4-trillion health sector, with no efforts at reform. And the healthcare plans he is proposing would add trillions more.
Mr. Obama argues that American companies are at a competitive disadvantage because of high health costs that add, for example, $1,500 to the price of a car. But health costs wouldn’t vanish under his plan; they would just get switched to another ledger through higher taxes.
The president is working with congressional leaders to write legislation that would require companies to provide a rich health benefits package — one more expensive than most can afford today. Companies who don’t comply would pay heavy fines. This is hardly a prescription for reducing costs.
The plan involves major new subsidies, creation of a new government health insurance plan, and possibly a requirement that all Americans must buy insurance. The entire plan is expected to cost at least $1.5 trillion over the next decade. This is far too much to be taking on in this economy.
To pay for this and many other changes to our health sector, the White House has set aside $634-billion as a “down payment” on health reform. But even this is difficult for Congress to swallow because it involves increasing taxes on mortgage interest deductions and charitable contributions for affluent taxpayers and cutting Medicare Advantage programs that serve lower-income seniors. These are bad ideas, especially in a fragile economy.
Pumping more money into the health sector and increasing demand will add to the inflationary pressuring, which will in turn exacerbate the cost problem.
The president argues there will be huge savings from its multi-billion dollar investments in information technology, wellness, and prevention.
He says the average family would save up to $2,500 a year as a result. But analysts say it will be hard to see any savings from these programs for the next decade, if then. And even if the savings materialized, Mr. Obama’s own advisors have acknowledged they would not actually accrue to individual consumers but to the system as a whole. So don’t hold your breath waiting.
They also argue that we must get everyone covered to lower health costs. Massachusetts actually provides us with evidence: The state was the first to require all residents to have health insurance, but the subsidies enacted as part of its reform plan are forcing lawmakers to impose new fees, taxes, and fines on employers and providers, and the program still is in the red, even with huge subsidies from the federal government through additional Medicaid funds.
The United States already is on red-ink alert with huge federal deficits as far as the eye can see and with existing entitlement programs that are threatening our country’s long-term economic survival.
So where does that leave us? It means that we need to focus on providing targeted help to the uninsured to purchase private coverage, giving people more options in buying health insurance and building a stronger safety net for those with pre-existing conditions.
That’s a full plate in itself, but one more likely to achieve results.
We can build on the strengths of our system, but it won’t happen if we try to reform one-sixth of our economy in one sweeping bill.
Grace-Marie Turner is a health policy expert who advised the McCain campaign. She is president and founder of the Galen Institute, a nonprofit research organization devoted exclusively to health policy. Readers may write her at Galen, 128 S. Royal Street, Alexandria, VA 22314.
