Obama Blames Past, Future Deficits on 'Wildly Expensive Health Care System,' Then Calls for More Spending

September 25, 2013 - 12:34 PM

Yesterday, Pres. Obama blamed past, and future, government deficits on the health care system - a problem he says can be fixed by spending more.

In his remarks at the Clinton at Clinton Global Initiative Health Care Forum in New York, Obama blamed a "wildly expensive health care system" for past and future deficits - and simultaneously called for increasing government spending on health care to match the spending by Canada, France and Great Britain:

"The fact is that we have been, up until recently, the only advanced industrialized nation on Earth that permits large numbers of its people to languish without health insurance.  Not only is there the cruelty of people who are unable to get health insurance having to use the emergency room as their doctor or their health service, but -- we're also more efficient than anybody else and so when we talk about, for example, our deficit -- you know this better than anybody -- the reason that we have not only current deficits but also projected long-term deficits -- the structural deficit that we have is primarily based on the fact that we have a hugely inefficient, wildly expensive health care system that does not produce better outcomes.

"And if we spent the same amount of money on health care that Canada or France or Great Britain did, or Japan, or any other industrialized country, with the same outcomes or better outcomes, that essentially would remove our structural deficit, which would then free up dollars for us to invest in early-childhood education and infrastructure and medical research and all the other things that can make sure that we're competitive and growing rapidly over the long term.

"So my view when I came into office was we've got an immediate crisis -- we've got to get the economy growing.  But what we also have to do is to start tackling some of these structural problems that had been building up for years.  And one of the biggest structural problems was health care.  It's what accounts for our deficit. It's what accounts for our debt. It causes pain and misery to millions of people all across the country.  It is a huge burden on our businesses."

This is a false argument, as analysis by Heritage Research Associate Alyene Senger explains, since Obamacare will actually increase budget deficits:

"While Obamacare is technically scored by the Congressional Budget Office (CBO) as a deficit reducer, when rational assumptions are made and budget gimmicks are omitted, the law is far from paid for, likely increasing future budget deficits and further burdening current taxpayers and future generations."

Senger notes that government spending on Medicaid and subsidies alone will increase spending by $1.8 trillion over the next decade:

"The two main coverage components of Obamacare are a massive Medicaid expansion and new government subsidies to purchase coverage in the government-run state exchanges. The new spending on these provisions will cost taxpayers nearly $1.8 trillion from 2014 to 2023."

Senger also explains that the projected "savings" from Medicare are illusory, since they're based on the unrealistic assumption that Medicare providers won't react to being rendered unprofitable by Obamacare:

"Another major source of funding for Obamacare's new entitlement spending comes from Medicare. Obamacare reduces Medicare reimbursements by an estimated $716 billion from 2013 to 2022, and that money is counted by the CBO as an offset for some of the law's new spending.

"However, these "savings" are highly unlikely to accrue in reality because of the severe impact these payment reductions would have on seniors' ability to access care. The Medicare Trustees project that if the cuts went into effect, 15 percent of Medicare Part A providers, such as hospitals, skilled nursing facilities, and hospices, would become unprofitable and likely stop seeing Medicare beneficiaries by 2019, with this percentage increasing to about 25 percent in 2030 and 40 percent by 2050.

"As the trustees point out, 'Under such circumstances, lawmakers might feel substantial pressure to override the productivity adjustments, much as they have done to prevent reductions in physician payment rates.'

"Of course, while overriding these cuts would help protect Medicare beneficiaries' access to care, it would leave that much more of Obamacare unpaid."