Obamacare and False Claims

Kevin Short over at the Huffington Post produced a wrongheaded post this week titled, “Obamacare Just Made Americans Richer Without Anyone Noticing”.  Citing a report issued by the Commerce Department’s Bureau of Economic Analysis and calculations made by the Wall Street Journal, Short claims Obama’s so-called Affordable Care Act (ACA), better known as Obamacare, was responsible for three-quarters of the rise in Americans’ spending and income growth in January.  Thus, according to Short, the ACA in its first month of operation has already made Americans richer.

The problem with Short’s analysis and the reason why Americans didn’t notice they were richer is because they aren’t.  Short’s claim is nothing more than typical Keynesian bunk.

So, how did the ACA make Americans’ richer in January according to Short?  Well, the expansion of Medicaid funding to the tune of about $19 billion and $15 billion in subsidies received by Obamacare enrollees did the trick.  The logic goes, because some Americans received a combined $34 billion in federal largess, that money will be spent in the economy providing new jobs for countless Americans.

Of course, what Short fails to mention is where the money for those welfare benefits (Medicaid and subsidies) came from.  Did they come from an increase in worker productivity?  Did they come from an expansion of business and employment?  No.  In fact, according to the Institute for Supply Management  its employment gauge in February declined for the first time in 25 months and currently stands at its lowest reading since March 2010.

Obviously, the money came from taxpayers, either through direct tax payments or debt monetization by the Federal Reserve.  Neither approach represents an expansion of the economy or wealth production.  What has happened is akin to taking money from one pocket and transferring it to the other.  Only in Short’s world and the world of Keynesians everywhere is this considered prosperity.

But, what is even more troublesome is how that $34 billion was spent in January.  Again, according to the Bureau of Economic Analysis, Obamacare handouts may have been responsible for a $29 billion increase in health care services.  Besides utilities, all other spending categories experienced a decline.

What this means is if Obamacare further increases government spending on health care, then the cost of health care will rise even higher.  All of that new money entering the health care industry will bid up prices to heights never seen before.  This is precisely the reason health care costs have been on the rise for the last 50 years.

Over the last few years, there have been many false claims made about Obamacare.  From “you can keep your coverage and doctor” to health care costs will decrease to more Americans will have health care coverage, there has been no shortage of mistruths.  And now we have the outrageous claim that the ACA is making Americans richer.  Not only does taking from one citizen and giving to another not make us richer, increased government spending on health care will surely make us poorer.

Young Voters Betrayed by Obama Policies

Barack Obama, in large part, owes his presidency to young voters.  In two presidential elections he has garnered 66 percent and 67 percent of their vote respectively.  Many of those votes proved pivotal for him in winning key states like Florida, Virginia, Pennsylvania, and Ohio.  And yet the President apparently feels no loyalty toward this group of voters that has given him so much.  In fact, it has become second nature for him to run roughshod over their interests.

To begin with, the economy Obama has produced for young people in close to five years of his leadership is horrendous.  His policies of regulate and spend have not permitted the economy to recover from the Great Recession that began in 2008.  Unemployment for 15 to 24 year olds is more than double the national average.  Many college graduates, unable to find a job, have returned to their parents’ nests to wait for better days and brighter employment prospects.  African-American teenagers face a jobless rate of more than 40 percent!

And while the President was attempting to “stimulate” the economy back to good health with profligate spending, what he did instead was run up a tab that young folks will have to pay back for many years into the future.  What’s more, when interest rates rise to their historic average and interest payments on the national debt more than double, paying back that debt will have to include much higher taxes or enormous cuts in government services.

Lastly, there is Obamacare.  The President is relying on young folks to make his health care scheme work.  He is counting on millions of them to purchase high cost plans to offset costs for the sick and elderly.  Of course, many will not accommodate the President’s wishes, thereby causing health care premiums to skyrocket for all consumers.  By the time the current crop of 18-30 year olds is interested in purchasing health care coverage the costs will be astronomical.  Thus he has put them in an unenviable position.  They are damned if they do, damned if they don’t.

Young people made a serious mistake giving Barack Obama their overwhelming support in the last two presidential elections.  But, what choice did they have?  John McCain and Mitt Romney weren’t much better alternatives.  What young people need are free market policies – sound money, a balanced federal budget, and deregulation.  It doesn’t appear this is going to happen anytime soon.

Obamacare is Mostly a Wealth Redistribution Program

President Obama has long held the view that wealth redistribution is good for America.  His most famous proclamation of that position came during the 2008 presidential race when in Ohio he told “Joe the Plumber”, “When you spread the wealth around, it’s good for everybody,” But, perhaps the best indicator of how he would govern as president came in a 1998 speech he gave to students at Loyola University.   Then, Illinois state Senator Obama said, “The trick is figuring out how do we structure government systems that pool resources and hence facilitate some [wealth] redistribution — because I actually believe in redistribution, at least at a certain level to make sure that everybody’s got a shot.”

The President’s signature legislative accomplishment as chief executive, the Patient Protection and Affordable Care Act, more widely known as Obamacare, is one of those government systems he spoke about whose purpose is to redistribute wealth to help everybody.

All along, it’s been clear that Obamacare’s goal was to provide health care coverage to the millions of Americans who could not afford their own coverage.  Its purpose was never to lower health care costs in general.  In order to accomplish the goal, Obamacare must take from some (the young, healthy, and responsible) and give to others (the not so young, unhealthy, or irresponsible).  At the end of the day, this amounts to nothing more than a program to redistribute wealth on a vast scale.  And that is exactly what is happening under the law so far.

CBS News has reported that more than two million Americans have recently been notified that their current health care policies do not meet the higher minimum standards mandated by Obamacare.  Therefore, they will lose their coverage on January 1, 2014.  It’s been estimated that about half of those who have lost coverage will pay more while the other half will pay less.  But, Obamacare is not based on actuarial science like other insurance schemes.  Those paying higher premiums in the future aren’t going to be paying more because they smoke or guzzle booze or participate in risky sexual practices.  They will pay more to subsidize those who pay less or nothing at all.  This defies the very essence of insurance – shared risk.  What incentive do the poor have to live a healthier lifestyle if those with more resources will always pick up their bill?

And watching Secretary Sebelius testify before the House Energy and Commerce Committee, I learned that single men, who have never given birth, are required under Obamacare to have maternity coverage!  Really?  Is this fair or is this a means to transfer wealth from men to women by using the income of the former to reduce the costs of the latter?  After all, the Administration believes women only earn about 70 cents of every dollar that men make.  Perhaps, the Administration is trying to achieve through Obamacare what it can’t through legislative action?

No matter the case, Obamacare is doomed to failure.  Yes, more Americans will be covered but the costs will overwhelm the system and those that are footing the bill.  As more and more high risk applicants sign up for health coverage through the exchanges, the premiums of those paying the bill will continue to rise.  The incentive for these folks will be to find a way to have Uncle Sam subsidize at least a portion of their coverage.  More Americans will become impoverished.  That is always the result of wealth redistribution policies.  The president is a learned man.  He should know this.