Health Care Proposals in President Obama’s Budget
President Obama’s budget includes nearly $1 trillion in new health spending—a $634 billion reserve fund as a “down payment” for expanded coverage, and $330 billion in spending for un-offset increases to physician reimbursements. The fund would be paid for in part through $318 billion in higher taxes on filers who itemize, “competitive bidding” for Medicare Advantage plans, and more government price controls on drug makers. Below are a few possible concerns with the proposal.
More Spending Will Not Control Costs
In a week where government actuaries confirmed that health spending will jump from 16.6% to 17.6% of GDP this year alone, President Obama’s plan would propose $1 trillion in new health spending—on top of the more than $150 billion in health spending in the “stimulus” bill. Members may therefore agree with Senate Budget Committee Chairman Conrad that “It’s very hard for me to understand why the answer is to put more money into the system.”
Creates New Entitlements without Making Current Ones Solvent
On the heels of a $74 billion expansion of children’s health insurance, the Obama Administration now proposes an additional $1 trillion in health care entitlement spending—at a time when Medicare alone faces nearly $86 trillion in unfunded liabilities. Members may believe that, before creating massive new government programs, Congress should focus instead on reducing costs and improving quality to make health care more affordable, making Medicare solvent for the long term, and reforming a flawed Medicaid system.
Raises Taxes During a Recession
More than half of the proposed savings for the reserve fund would come by raising taxes still further on those individuals making over $250,000—the same people for whom Obama wants to let the Bush tax relief expire. More than half of all top-income filers are small businesses, and raising taxes on small businesses that create jobs will only prolong our current slowdown. Members may also note that the President’s proposal would reduce individuals’ ability to deduct charitable donations—which may discourage donations to health-related charitable organizations.
Skyrocketing Government Spending and Taxes
As of February 26, the White House website still claims that “Barack Obama will pay for his $50-65 billion health care effort by rolling back the Bush tax cuts.” However, the budget proposal includes $1 trillion in new spending, paid for by new tax increases, as a “down payment” for more spending—and more tax increases—to come.
Government Care Means Government Control
Government programs constitute nearly half of all health care spending, and increasing government’s market clout still further may well lead to rationing of procedures as a way to contain costs. The federal government already imposes price controls on doctors, hospitals, and pharmaceutical companies—leading some Members to wonder when controls on patient procedures will follow.