I wrote a few weeks ago about the hidden economic damage of Obamacare, particularly the harm to the job market.
Today, let’s get further depressed by looking at the ever-worsening fiscal damage of the law.
Here’s some of what Chuck Blahous of Mercatus wrote about this costly new entitlement.
The ACA was enacted in 2010 with the promise of reducing the federal budget deficit while expanding health insurance coverage. Nearly lost amid the recent press cheerleading over ACA enrollment figures is that this promise has disintegrated, and now no one…can say how much fiscal damage the ACA will ultimately cause. …CBO currently estimates that the ACA’s coverage provisions will cost the federal government $92 billion a year by FY2015. This is roughly 0.5 percent of projected U.S. economic output for 2015, well exceeding the relative costs of Social Security and Medicaid at similar points in their histories. (The amount falls just short of the proportion of GDP absorbed by all of early Medicare.) Worse, the federal fiscal position was far weaker when the ACA was passed than when Social Security, Medicare, and Medicaid were created.
That’s bad news, but things will get even worse in coming years.
Troubling though the ACA’s startup costs are, they represent only the tip of the fiscal iceberg that will be the fully phased-in law. CBO projects that its annual costs will hit $200 billion by FY2020, or nearly 0.9 percent of GDP. Yet this assumes that lawmakers will be content to allow the ACA’s health insurance subsidies to grow more slowly than low-income beneficiaries’ health care costs, as the law now stipulates. Thus there is every reason to believe that the ACA’s eventual costs will far exceed initial estimates, as happened with Social Security, Medicare, and Medicaid. …Also unclear is whether the ACA’s reinsurance and “risk corridor” provisions will produce unexpected federal budget costs; these provisions were included in the ACA to protect insurers… the Obama administration continues to promise both participating health insurers and taxpayers that they will each be protected from loss under the risk corridor provisions.
The potential bailout for insurance companies is bad news for taxpayers, but it’s even more upsetting for moral and practical reasons.
The big insurance companies got into bed with the White House, figuring it was a good idea for the federal government to coerce Americans into buying their product. As far as I’m concerned, they should swallow heavy losses.
But in Washington, there’s rarely a downside for doing the wrong thing. Instead, this could be like TARP. A reward for bad behavior.
By the way, it’s not just policy wonks who are concerned about the fiscal burden of Obamacare. According to Roll Call, the Congressional Budget Office has – for all intents and purposes – given up trying to estimate the fiscal burden of the legislation.
For Democratic lawmakers who were hesitant to sign onto the sweeping 2010 health care law, one of the most powerful selling points was that the Affordable Care Act would actually reduce the federal budget deficit…the answer to that question has become something of a mystery. In its latest report on the law, the Congressional Budget Office said it is no longer possible to assess the overall fiscal impact of the law. That conclusion came as a surprise to some fiscal experts in Washington and is drawing concern. …In a little-noticed footnote to a report issued in April, “Updated Estimates of the Effects of the Insurance Coverage Provisions of the Affordable Care Act,” the CBO wrote that it and the Joint Committee on Taxation “can no longer determine exactly how the provisions of the ACA that are not related to the expansion of health insurance coverage have affected their projections of direct spending and revenues.”
Translated into plain English, Obamacare is a budgetary black hole.
If only somebody could have predicted that this would happen. But actually, many people did. The history of entitlement programs is that they are bad news in theory and even worse news in reality.
Indeed, even I warned that Obamacare was going to be a bigger fiscal nightmare than originally predicted, as seen in this video.
This Eric Allie cartoon doesn’t focus on the fiscal problems of Obamacare, but it’s worth sharing because the entire law is a mess.
Too bad the American people are the guinea pigs for this experiment in statism.
Wouldn’t it be nice if instead we had the freedom to experiment with market-based healthcare?
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Obama really did try to sell people on the idea that spending would go down at the same time more benefits would be given. Absurd!!
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Reblogged this on Public Secrets and commented:
The Democrats and their enablers, including the big insurance companies and groups like AARP, have much to answer for.
HILLARY CLINTON FOR PRESIDENT Why? She has a great background of achievements which qualifies her. She was second in 12 Years as Governor. Second in 8 years as President and 4 years as first in Secretary of State. Bill said, in Georgetown U. his two objectives were to improve Education and the Economy in Arkansas. Hillary visited all 60 precincts in the Arkansas system pressing for better teaching and learning. Grades improved and far more went to college. She helped get the national minimum wage up by 49% and helped created the best economy in our history. She is brilliant of mind and aggressive for improvements. She will produce good results in America. Vote for her. Clarence Swinney
As with all government programs, politicians claim “seen” benefits and ignore the “unseen” economic costs.
The problem for supporters in this case is that implementation has resulted in “seen” incompetence, “seen” costs, and “seen” over-reach regarding religious freedom. Soon we will have “seen” decreases in quality of care.
An obvious next step toward government run healthcare has been taken off the table with the “seen” Veterans Administration scandal.
Too bad such a large portion of the population is blinded by MSM and distracted by “good intentions”.
Reblogged this on Gds44's Blog.
Even future direct costs will be dwarfed by the main effect of ObamaCare : lost output, due to lower motivation to work, compounding into the future — indefinitely.
As the inevitable consequences of lower growth erode American prosperity rankings in the world, desperate voters will rush to the polls for even more government help, ie even more redistribution. The complete nationalization of healthcare will be the inevitable end result.
When you disincentivize people from working and producing, and the motivational levels of your citizenry drop below the level of your closest competitors, then you decline. It’s just as simple as that.
But voting for Santa Claus is irresistible. Because to most voter-lemmings a redistribution dollar today is worth five perpetually compounding dollars in the future.