Small Biz Health Care Daily: Health Care Agenda and the Deficit

During his big health care speech to Congress on September 9, President Obama declared: “I will not sign a plan that adds one dime to our deficits – either now or in the future.”

That’s some claim. And a good many people, I think, simply do not believe it.

After all, official estimates peg the ten-year costs for this proposal to dramatically expand government’s role in health care run around the trillion-dollar mark – give or take a few hundred billion dollars here and there. And once one understands that cost estimates for government health care programs are notorious for being dramatically low-balled at the outset, the actual costs, as noted by various estimates, will turn out dramatically higher. Note that Medicaid and Medicare, for example, turned out to be many multiple times more expensive than originally suggested, and there is no reason to believe that will not be the case with ObamaCare.

But let’s take the President at his word on the deficit issue. That is, that he will not sign a bill that is not fully funded.

Unfortunately, his dream to pay for most this proposal by “reducing the waste and inefficiency in Medicare and Medicaid” will turn out to be nothing more than a dream.

What does that all mean then? Obviously, it would require massive tax increases. The Obama agenda already features higher personal income, capital gains, and dividends taxes on upper incomes; increased death taxes; and increased costs on businesses through the health care play-or-pay mandate. Many other measures are being kicked around Congress, including higher taxes on insurance companies, clinical labs, and medical device manufacturers. And of course, there are all kinds of proposals being considered to jack up energy taxes, one way or another.

All of these proposed tax increases would raise costs for consumers and businesses; reduce incentives for entrepreneurship and investment; and severely restrain economic growth and job creation. And guess what? They still would not be enough to fund the big government health care agenda being peddled by the Obama administration and leaders in Congress.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council