Obama Health-Care Plan Destroys Cheap Health-Care Options, Raises Taxes, Breaks Promises

by Hans Bader on July 23, 2009

In 2008, Obama promised not to raise taxes on anyone making less than $250,000 a year. But he is now breaking that promise by proposing to tax some middle-class families to pay for health care. Obama has also falsely pledged that if you like your health insurance, you will be able to keep it under his plan. But the Congressional health-care bills he backs would destroy countless inexpensive health-care plans by gutting a federal law called ERISA that makes it possible for employers to offer them. Obama’s plan does nothing to curb the main drivers of health-care costs, even as it raises the specter of rationing and social engineering. It will not cover as much of the population as the health-insurance systems in France or Switzerland, but it will cost much more.

As CNN notes, Obama’s plan would take away “5 freedoms,” including the freedom to choose your doctors, the freedom to choose what’s in your plan, the freedom to keep your existing plan, the freedom to be rewarded for healthy living, and the freedom to choose high-deductible coverage.

Obama’s health-care plan is drawing criticism from one of his own advisers, Harvard University’s Martin Feldstein. In the Washington Post, Feldstein warns that “For the 85 percent of Americans who already have health insurance, the Obama health plan is bad news. It means higher taxes, less health care and no protection if they lose their current insurance because of unemployment or early retirement.” Obama’s plan would “cost more than $1 trillion,” and raise the top federal “income-tax rate from 35 percent today to more than 45 percent,” he notes.

Its increase in health-care costs is so obvious that even Democratic governors openly worry that it will explode their states’ Medicaid costs. Conservatives are concerned that it would single out illegal aliens for preferential treatment, because it permits illegal aliens, but not American citizens, to avoid buying health insurance, even though illegal aliens could access government-sponsored health insurance through the so-called “public option,” thanks to its lack of eligibility verification safeguards. Supporters of universal health care coverage like Mickey Kaus worry that it will lead to arbitrary restrictions on health care for people who now have decent health-care coverage.

In 2008, Obama promised not to impose any kind of tax increase on people making less than $250,000 a year: “I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.” (Barack Obama, September 12, 2008, Dover, NH). But millions of people now face direct or indirect tax increases under his plan.

Obama’s plan so obviously would increase the deficit that its supporters are now crafting a tax on health insurance provided to non-union workers. Never mind that Obama’s campaign spent millions of dollars on campaign ads attacking the very idea of taxing health-insurance benefits.

It’s not the first breach of Obama’s campaign pledges to the middle class. Obama earlier broke his promise by signing into law an excise tax increase (the SCHIP tax) paid mainly by the poor, and advocating income tax increases on households that make thousands of dollars less than $250,000 a year. These tax increases are part of a long line of broken promises, such as Obama’s pledge to enact a “net spending cut,” which he flouted with proposed budgets that will explode the national debt through $9.3 trillion in massively increased deficit spending.

Obama also backs a huge cap-and-trade carbon tax that would be borne disproportionately by low-income households. (The cap-and-trade tax was pushed through the House before the text of the bill even became available. The bill was over 1090 pages long and contained special interest giveaways to a legion of big corporations and their lobbyists. At the last minute, 300 more pages were added to the bill that few in Congress had even read, and had to be manually inserted into the existing 1000 pages after the bill was passed, based on guesses about where those pages would fit in. Thus, the bill did not even really exist at the time it was passed). In 2008, Obama privately admitted to San Francisco Chronicle reporter that his cap-and-trade carbon tax would cause people’s electric bills to “skyrocket.” The cap-and-trade bill will cost the economy trillions, while doing little to cut greenhouse gas emissions, since it contains so many special interest giveaways and environmentally-destructive provisions like protections for ethanol, which promotes soil erosion and deforestation. Meanwhile, Obama sabotaged nuclear power, which reduces greenhouse gas emissions, by blocking use of the Yucca Mountain nuclear-waste disposal site after billions of dollars in taxpayer money had already been spent developing it.

The Wall Street Journal explains how the health-care bills backed by Obama would destroy many cheap employer health-care plans by gutting key provisions of the federal ERISA law, which slices through red tape and allows employers to provide economical health-insurance plans on a nationwide basis. The bills would open the floodgates to costly lawsuits against employers that provide health insurance to their employees, and require bureaucratic approval of health-insurance plans before they could go into effect on a national basis. In the absence of ERISA, health insurance plans provided by a national company have to satisfy a bewildering array of conflicting regulations and mandates that differ from state to state, add cost, complexity, and delay to medical care, and balkanize the health-care sector.

Other countries that have cheaper health care do not have local health-insurance regulations, preferring one national regulatory scheme for everyone. My French father-in-law is a communist trade unionist, but it was obvious even to him that he needed private supplemental health insurance to fill the gaps in France’s national health-care system. So he bought a private health insurance policy on the free market that came in handy when he needed continuing care after his quadruple bypass surgery. Supposedly socialist France actually has much less regulation of health insurance than supposedly capitalist America, where insurance is terribly costly in states like New York and New Jersey because of all the regulations and government mandates.

Economists and insurance experts have long proposed ending the federal regulation that allows states to block consumers from buying health-insurance across state lines. Almost every other product can be bought across state lines. But the Obama Administration is rigidly opposed to this reform. In a debate with Sarah Palin, Joe Biden championed this harmful regulation that impoverishes American consumers to reinforce the power of state bureaucrats and the profits of expensive health-insurance providers that benefit by thwarting competition from cheaper out-of-state rivals. So much for fixing what’s wrong with the status quo.

Without the reforms opposed by Obama, we will never get our health care costs down to the levels of other countries, which have enormous cost advantages over the U.S. through things like lower doctor and nurse salaries, less defensive medicine from costly and unwarranted malpractice suits (America uses virtually unguided juries to decide malpractice cases, even though juries are not experts either at seeing through unfounded claims, or at recognizing genuine ones where the doctor was really negligent), and lower drug costs (mostly from those countries’ artificial caps on drug costs, which effectively forces U.S. consumers to pay for the entire world’s R&D costs, and partly from other factors like lower products-liability costs, since the U.S. refuses to preempt even lawsuits against FDA-approved drugs). Liberal lawmakers are seeking to make Obama’s plan even worse and more costly by turning it into a “trial lawyer bonanza.”

Earlier, the non-partisan Congressional Budget Office gave an honest but “devastating assessment” of the incredibly high cost of the health-care plans backed by Obama, which would cost well over a trillion dollars, to cover just 16 million of the more than 40 million uninsured Americans.

Obama is angry about that truthful conclusion, as well as the CBO’s finding that his wasteful stimulus package will actually reduce the size of the economy “in the long run.” (The stimulus package also destroyed thousands of jobs in America’s export sector, and ended welfare reform).

So Obama recently invited CBO Director Douglas Elmendorf, a “Democratic appointee,” to the White House to pressure him to reduce his cost estimates. Earlier, Democratic Senator Majority Leader Harry Reid earlier attacked Elmendorf for reporting the truth about the Administration’s costly health care plans, suggesting that Elmendorf should “run for Congress.” To Reid and Obama, politics comes before truth. But the last thing we need is Enron-style accounting from government accountants.

Obamacare would also restrict resources for end-of-life care for the elderly, and mandate the provision of wasteful end-of-life counseling for the elderly (such as lecturing them about the right to hasten their own death by refusing nutrition).

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