If you were around in 2010, you surely remember the weeping and gnashing of teeth that accompanied the passage of the Affordable Care Act (ACA), better known as Obamacare.
The outcry was warranted. Obamacare was (and still is) a terrible plan that caused health insurance rates to skyrocket and pummeled the middle class.
But it should surprise everyone that relatively little has been said, at least in comparison, about the healthcare provisions in the looming Budget Reconciliation package.
The text currently includes many of Senator Bernie Sanders’ (I-Vermont) healthcare policy wish list, and allocates the following amounts of money:
• $165 billion to expand Obamacare
• $300 billion to expand Medicaid
• $370 billion to add new Medicare dental, vision, and hearing benefits
• $400 billion for a Medicaid giveaway to home health care unions
All in all, this would be the biggest expansion of government-run healthcare since Obamacare. In fact, the total spending dwarfs Obamacare’s by 40 percent. The initial cost of the ACA was $940 billion, while this plan weighs in at $1.3 trillion—$1.3 trillion that, it must be repeated, we do not have.
Even worse than the costs of these provisions is the method by which Congress proposes we pay for them. First on the list is a plan to make cuts to Medicare, a service that millions of seniors and those on long-term disability rely on for their health care needs—and that is already running out of money.
In fact, even at current levels the Congressional Budget Office predicts that Medicare’s Hospital Trust Fund, Part A will run dry by 2024, yet Congressional Democrats want to expand its services while also making cuts in other areas. Ultimately, it’s likely this plan would lead to benefit cuts, tax hikes, and eventually higher Medicare premiums for seniors—many of whom live on fixed incomes.
Additionally, legislators propose giving bureaucrats the ability to “negotiate” drug prices, which is really just another word for price caps. We know price caps wreak havoc every time they are attempted, but throughout our history, progressives continue to return to them over and over again—showcasing a lack of basic economic literacy.
Ultimately we know price controls lead to shortages, rationing, inferior product quality, and black markets. And based on the data we have, this policy is already poised to do just that.
If enacted, it’s clear this policy would lead to Medicare and Medicaid limiting their enrollees’ access to cutting-edge drugs. The Congressional Budget Office has said as much multiple times and issued yet another statement on the matter this month.
“The lower prices under the bill would immediately lower current and expected future
revenues for drug manufacturers, change manufacturers’ incentives, and have broad
effects on the drug market. A manufacturer that was dissatisfied with a negotiation could pull a drug out of the U.S. market entirely.”
“In addition to the effects on the federal budget, CBO anticipates, the bill would affect the
use and availability of drugs over time. In the short term, lower prices would increase use
of drugs and improve people’s health. In the longer term, CBO estimates that the
reduction in manufacturers’ revenues from title I would result in lower spending on
research and development and thus reduce the introduction of new drugs.”
I don’t mean to be an alarmist, but this is really bad. Our healthcare market is already in shambles, having been choked to death by red tape, cronyism, and special interests for over a century. This legislation would only compound the problems that have created this mess in the first place and make affordable healthcare even more out of reach for most Americans.
Enough is enough. It’s time to sound the alarm.