Obama-Care: Basic Questions Elusive Answers

published by Joe Jarvis on Wed, 01/19/2011 - 11:14

In a news analysis piece published in the New York Times (find it here), columnists David M. Herzenhorn and Robert Pear boil down the current national debate about Obama-care to four basic questions:


Will the health care law, approved last year by Democrats with no Republican support, increase or reduce future federal deficits?

Will the law lead to the elimination of jobs by overburdened employers as Republicans assert, or will it create jobs as Democrats maintain?

Will the law raise or lower the cost of medical care for individuals and families, employers, and state and federal governments?

And, will the law achieve President Obama's goal of providing coverage to more than 30 million uninsured Americans?

Then the two columnists explain why there are no answers to these questions. Excerpts:

As floor debate on the repeal measure opened on Tuesday, Representative Paul Ryan, Republican of Wisconsin and chairman of the Budget Committee, who is a respected voice on fiscal issues, declared that the health care law would “accelerate our country’s path toward bankruptcy.”

Mr. Ryan expressed one of the Republicans’ main complaints: that Democrats and independent Congressional budget analysts have underestimated the costs of the law, which Republicans say will ultimately add hundreds of billions of dollars to future federal deficits.

The nonpartisan Congressional Budget Office disagrees.

In its official analysis, the budget office estimated that the cost of new benefits in the health care law would be more than offset by revenues from new taxes and by cuts in projected Medicare spending, reducing future deficits. Repealing the law, the budget office has predicted, would add $230 billion to federal deficits from 2012 to 2021.

Republicans dispute that, saying the cost will be far higher than expected.

The budget office has said that its estimates are based on the most likely outcomes, and that the eventual cost of the bill is equally likely to be higher or lower.

The office has also said that lawmakers may find it difficult to follow through with some aspects of the law, particularly cuts in projected Medicare spending. If the cuts do not take hold, the cost of the law could soar.

The White House and Congressional Democrats said the law would create more than 300,000 jobs, by slowing the growth of health costs so employers would have more to spend on wages and hiring. In addition, they said, the law provides tax credits to help many small businesses buy insurance for their employees.

By contrast, Representative Sam Graves, Republican of Missouri and chairman of the House Committee on Small Business, said the law “could cost our economy 1.6 million jobs, one million of which could come from small businesses.”

Many economists say the effects on jobs are likely to be modest. Most large companies already provide health benefits to employees. And many small businesses will be exempt from penalties if they fail to do so.

But Democrats say that if the law provides coverage to more than 30 million currently uninsured people, as intended, it will increase demand for medical services, thus creating new job opportunities in the health care industry.


The law includes many provisions intended to restrain medical costs, which have long grown faster than general inflation.

For example, it would trim Medicare payment rates for hospitals and many other health care providers; create an independent advisory board to recommend further savings in Medicare; and encourage doctors and hospitals to coordinate care, eliminate duplicative tests and reduce the readmission of patients to hospitals.

But experts say they are not sure how effective these provisions will be, and note that countries around the globe have struggled to control medical costs.

But even with a provision in the law requiring that most Americans obtain insurance, it is possible that the law will not cover as many people as expected. Some supporters of the law have questioned whether federal subsidies will be adequate to make insurance affordable for lower- and middle-income Americans.


My comment:

As this article makes clear, the alleged cost saving measures in Obama-care assume that Congress will act to reduce Medicare spending, something which has never happened despite decades of intentions on Capitol hill. I suggest that that alone indicates the Republicans are correct about the real costs of Obama-care being much higher than projected by CBO.

And to argue that Obama-care increases jobs because it will create many more jobs in the health care sector, as is apparently being done by Democrats, is to assert that nothing needs to be done about the rapidly growing portion of the GDP dedicated to health care. Our nation is rapidly approaching 20% of GDP in health care, twice the slice devoted to the same sector in other developed economies. The GDP is a zero sum game; if you spend a larger part of it on health care something else must be getting the short shrift. The opportunity cost of our growing health care sector can only be understood when we find out what we are spending less on because we are spending more on health care. At least part of the answer is that we are spending less on education at all levels and less on new product development, both of which are needed for the growth of our future economy.

Of course it is certain that whatever the GOP controlled House of Representatives does about Obama-care, nothing in the short term will change, because the Senate is unlikely to act and Obama would surely veto if it did. But the courts will play a role in this as well. Today's Salt Lake Tribune carried an article indicating that another six states have signed onto a lawsuit filed in Florida to declare the individual mandate in Obama-care unconstitutional (find the AP article here). This means that half the states oppose the legislation, or at least a core part of it.

Even if Obama-care is not eventually repealed (in Congress or in the courts), it is doubtful that it can be fully implemented. The Medicaid expansion mandate alone is beyond the means of the states. And repealing or failing to implement both leave us with the question of what other approach to take, because health care costs are drowning the US economy and will rob us of our way of life if we don't change the way we do health care business.

Yours,

Dr. Joe Jarvis