Long-Term Budgeting, Obama-Style
The health-care law’s hidden features


James C. Capretta

By 2020, the total tax hike associated with Obamacare will already be bad enough — about 0.5 percent of GDP. But by 2035, because of bracket creep, it will have more than doubled — to 1.2 percent of GDP, according to CBO. And it won’t stop there. It will keep going up every year, in perpetuity.

The second part of the Democrats’ long-term budget plan is the imposition of a global budget on the U.S. health sector. For years, Democrats have wanted to give the government the power to set prices in the health sector, and not just for public insurance programs, but for private-sector health care, too. In 1994, President Clinton explicitly sought such authority as part of his health-care push, which was one key reason his effort failed.

President Obama wants to achieve the same objective, but once again has chosen to pursue it in a way that is less perceptible to voters. Obamacare established what’s known as the Independent Payment Advisory Board, or IPAB, supposedly to find cost “efficiencies” in Medicare. In truth, the IPAB’s mandate is to enforce what amounts to a cap on overall Medicare spending. The only tool at its disposal to do so is price setting for suppliers of services and products to Medicare patients. It will impose arbitrary, across-the-board payment-rate reductions to hit budget targets, which will have the predictable result of driving willing suppliers of services out of the marketplace.

As the years go by, if Obamacare is allowed to stand, tens of millions of American will become enrolled in publicly subsidized coverage. The costs to the Treasury will be steep — and will lead to calls for greater cost control. That’s when Democrats will push for the next step — to extend the IPAB’s authority beyond Medicare to the insurance plans subsidized by Obamacare. We will nearly be at the bottom of the slippery slope to a Canadian-style health system.

The Democratic plan for closing the budget gap has always centered on raising taxes and rationing care. What most people don’t yet realize is just how far Obamacare has already taken us down that road.

— James C. Capretta is a fellow at the Ethics and Public Policy Center. He was an associate director of the Office of Management and Budget from 2001 to 2004.


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