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A Fantasy-Based Case for Obamacare
In the New York Times, J. D. Kleinke distorts reality to fit his narrative.

The American Enterprise Institute’s J. D. Kleinke

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James C. Capretta

The other great struggle in U.S. economic policy is over the future of the entitlement state, which Kleinke ignores entirely. Even before Obamacare, the federal budget was buckling under the weight of massive increases in entitlement spending. In 1972, the federal government spent 4.4 percent of GDP on Social Security, Medicare, and Medicaid. By 2011, spending on the “big three” had risen to 10.3 percent of GDP. The increase alone, 6 percent of GDP, is larger than the entire budget of the Defense Department. There is no greater threat to the long-term strength of the American economy than uncontrolled entitlement spending.

Instead of reforming these entitlements while trying to broaden insurance coverage, Obamacare leaves the current behemoth in place and then piles massive new commitments on top of it. According to the Congressional Budget Office, the law will entitle at least 30 million people to expensive new health-insurance subsidies, and that number could easily rise by 20 million or more if employers dump their workers at moderately higher rates than the CBO assumes. The new spending for these commitments will grow at a rate of about 8 percent per year from 2016 through 2022, pushing the new entitlement’s cost at the end of the ten-year projection period to $250 billion a year. Over the long run, this new spending commitment will add trillions to the government’s unfunded liabilities.

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The law’s proponents argue that these commitments are fully paid for with spending cuts and taxes. This is false. A primary source of funding is the reimbursement cuts in the Medicare program that are so plainly unrealistic that the chief actuary has said repeatedly they can’t be relied upon to finance the bill. And the tax hikes in Obamacare are reason enough for conservative opposition: Totaling $800 billion over a decade, these taxes will lessen growth by reducing investment and the labor supply, and will reintroduce “bracket creep,” a way to push tax collection higher and higher with each passing year. The CBO estimates that Obamacare will push up federal tax collection by more than 1 percent of GDP by 2035, largely because the taxes will apply to more and more middle-class Americans.

There’s plenty else to dislike in the law, of course: There’s IPAB, which hands over authority for Medicare price-setting to 15 unaccountable bureaucrats; the large increase in effective marginal tax rates for those in the law’s new subsidy structure, which will discourage work; the strong disincentives for employers to employ more than 50 people . . . and on and on.

But Kleinke never mentions any of that. Instead, at the end of his piece he rolls out the bizarre contention that the real reason for conservative opposition to the law (beyond general animosity toward the president) is the GOP’s relentless war on women:

Social conservatives’ hostility to the health care act is a natural corollary to their broader agenda of controlling women’s bodies.

It’s hard to know what to say about such a comical caricature. But perhaps Kleinke did us a service by including it, because it’s clear indicator of how seriously we should take the rest of his argument.

James C. Capretta is a visiting fellow at the American Enterprise Institute and a fellow at the Ethics and Public Policy Center.



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