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Tuesday, June 16, 2009
5:04 PM EDT
Wallace Forman

Obama's Health Care Bait and Switch

In his speech to the AMA yesterday, President Obama sounded dire warnings of a coming health care crisis:

Today, we are spending over $2 trillion a year on health care -- almost 50 percent more per person than the next most costly nation.
….
The cost of our health care is a threat to our economy. It's an escalating burden on our families and businesses. It's a ticking time bomb for the federal budget. And it is unsustainable for the United States of America.
….
If we fail to act, one out of every five dollars we earn will be spent on health care within a decade. And in 30 years, it will be about one out of every three -- a trend that will mean lost jobs, lower take-home pay, shuttered businesses, and a lower standard of living for all Americans.
What was the President’s bold plan for warding off the fiscal tidal wave? Spend more:
As part of the budget that was passed a few months ago, we put aside $635 billion over 10 years in what we're calling a Health Reserve Fund. Over half of that amount -- more than $300 billion -- will come from raising revenue by doing things like modestly limiting the tax deductions [of] the wealthiest Americans.
That’s right: the solution to runaway costs is a $635 billion subsidy of the health care industry, paid in part by a “modest” $300 billion increase in income taxes! Apparently bored of his old job as car-dealer-in-chief, the President has decided to try his hand as a huckstering insurance salesman.
 
Here are the facts. In his stimulus plan, Obama authorized an $89 billion increase in “temporary” Medicaid spending, $24.7 billion in health subsidies via COBRA, and $19 billion for dubious health information technology expenditures. He also signed into law an expansion of SCHIP, for a CBO-estimated 10 year cost of $65.4 billion. If health care costs are spiraling out of control, the President is part of the problem, not part of the solution.
 
If you want more of something, subsidize it. If you want less of something, tax it. Obama’s plan to provide an “affordable” (read: subsidized) public insurance option is guaranteed to increase health care spending. His plan to tax the wealthy is just as sure to discourage entrepreneurship and prolong the recession.
 
For a realistic plan that would control exploding costs without damaging the economy, see this proposal by Ryan Ellis, Tax Policy Director for ATR.
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