Voice For Voters

By Elois Zeanah

Independent analysts and the Government Accountability Office (GAO), the watchdog of Congress, have for years repeatedly warned that federal and state budgets will collide with taxpayers’ ability to pay the rapidly rising costs of health care entitlement programs.  Yet not only did Obama vote against reform bills as a Senator, his unsustainable proposals as President accelerate the pace toward collision. 

 The notion by Obama that he can expand Medicare and Medicaid and give all Americans affordable health care is quickly dispelled by highly respected GAO analysts.  Obama’s plan to broaden the pool of these two programs will not alleviate but aggravate the current fiscal crisis.

 THE FISCAL NIGHTMARE

“The official projections for current entitlements show that the American people will be confronted with a series of unpleasant options: savage benefit cuts, massive tax increases, or a combination of both.  Heritage Foundation analysts, among many others, have amply documented the long-term economic catastrophe that lies ahead without comprehensive entitlement reform.[1]

GAO:   76% of every $1 will go to Health Care and Debt Interest

GAO has candidly told Congress:

• “Just ten years from now in this simulation that is based on historical trends and recent policy preferences, 76 percent of every dollar of federal revenue will be spent on retirees and their health are providers, health care providers for the poor, and our bond holders.  This leaves little room for other priorities, such as national defense and investment in infrastructure and alternative energy sources, and threatens the government’s fiscal ability to respond to emergencies, both natural and manmade.”[2]
• “The GAO estimates that it would take a 39 percent increase in revenue, or a 37 percent decrease in non-interest spending, to close the federal fiscal gap.”[3]
• “Further, the GAO points directly to health care spending as the major cause of the fiscal gap: “Rapidly rising health care costs are not simply a federal budget problem; they are our nation’s number-one long-term fiscal challenge.”[4]

President Obama uses these dire warnings to make his case to Americans.  Yet, interestingly, his plan does exactly the opposite of what economic experts tell us reform must do:  Cut health care entitlement expenses!  Obama ignores these warnings and instead of cutting Medicare, Medicaid and SCHIP, Obama expands these three health care programs in the name of reform and magnifies problems as a consequence.  His proposals will not only lead to more expensive programs and greater deficits but higher taxes at both the federal and state levels.

Government Health Care Costs Will Force States to Raise Taxes

• GAO’s warnings include that “Health care costs, principally Medicaid costs,[5] even at current levels will force states to raise revenue or reduce spending by 7.6 percent every year in order to close the fiscal gap faced by state and local governments.”
• “It is ironic that just as Senator Baucus and others propose to add millions of additional beneficiaries to the fiscally troubled Medicaid program, Congress is on the threshold of passing a temporary increase in the Medicaid Federal Medical Assistance Percentage (FMAP), the federal Medicaid match, in order to provide urgent economic relief to states.”[6]

WILL OBAMA CAUSE PRIVATE HEALTH CARE TO CRASH TO GET CONTROL OF HEALTH CARE?

“Adding more people to Medicaid when states cannot even afford their current programs makes no sense – unless the real object is to crash the program in order to force the states to support a single-payer system, under which the federal government would take over the entire health care system.  Congress’s own analysts have demonstrated that the current path for Medicare and Medicaid is unsustainable.”[7]

• “The Obama and Baucus proposals…directly undermine the historic accomplishments of the 1990s welfare reform, which was designed to get Americans off of dependence on government programs.  Indeed, expanding the private health insurance pool and spreading risk over a larger population would help to stabilize health insurance premiums and slow the growth in health care costs.”[8]
• “The President and Senator Baucus would also undertake a major expansion of existing government health care programs and entitlements, including Medicare, Medicaid, and the State Children’s Health Insurance Program (SCHIP).”
• “Medicaid is already unsustainable for states and is already threatening state budgets”
• “Expanding Medicaid discriminates against low-income families and provides limited access to health care.”

“EXPANDING MEDICARE AND MEDICAID AND INCURRING NEW LIABILITIES IS, TO PUT IT MILDLY, UNWISE

“Congress, in launching a recent series of massive bailouts, an unprecedented splurge in federal spending, has just created a record deficit of $1.6 trillion.  At the same time, Congress has avoided the tough but vital decision about how to pay for the massive entitlement obligations that have already been incurred in Medicare and Social Security, let alone how to finance new ones.

• Medicare’s unfunded liabilities stand at $38 trillion currently.  “Medicaid’s long-term unfunded liability will be even greater than Medicare’s because Medicaid is funded entirely through general funds on a pay-as-you-go basis, with no trust funds or dedicated payroll tax available for its use.
• “Given the unsustainable cost of the current programs and the utter failure of Congress to address these issues, it is hard to imagine how Congress would plan to finance additional entitlement costs.  The current approach on Capitol Hill is to avoid such accountability.”[9]

 

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[1][1][1] Ibid.  (See Heritage entitlement spending charts, “Entitlement Spending Will More than Double by 2050,” “Entitlements Alone Will Eclipse Historical Tax Levels by 2052,” and “Mandatory Spending Consumes Growing Share of Total Spending,” at http://www.heritage org.  See also: U.S. Government Accountability Office, “The Nation’s Long-Term Fiscal Outlook: September 2008 Update, GAO-09-94R, at http://www.gao.gov/new.items/d0994r.pdf (Feb. 6, 2009), and “State and Local Fiscal Challenges: Rising Health Care Costs Drive Long-Term and Immediate Pressures, GAO-09-21-OT, Nov. 19, 2008, at http://www.gao.gov/new.items/d0921t.pdf (Feb. 9, 2008)

 

 

[2] U.S. Government Accountability Office, “The Nation’s Long-Term Fiscal Outlook: September 2008 Update, p. 2.

[3] Ibid., p. 10

[4] Ibid., p. 8

[5] Ibid., p. 5

[6] The Heritage Foundation: “Note to Congress: Expanding Health Care Entitlements is Bad Policy,”, by Dennis G. Smith, Feb. 12, 2009

[7] Ibid.

[8] The Heritage Foundation: “Note to Congress: Expanding Health Care Entitlements is Bad Policy,” by Dennis G. Smith, Fe. 12, 2009

[9] The Heritage Foundation, “Note to Congress: Expanding Health Care Entitlements is Bad Policy,” by Dennis G. Smith, February 12, 2009

This entry was posted on Sunday, September 6th, 2009 at 2:11 pm and is filed under Economic Crisis, Health Care. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.