America / Healthcare

Healthcare in Obama’s Second Inaugural Address

By Ji Lee

On Monday January 21, 2013, President Barack Obama delivered his second inaugural speech at the United States Capitol building.

Having viewed the inauguration, there are a few components related to the future of healthcare that I would like to highlight.

President Obama mentioned that “Together we discovered that a free market only thrives when there are rules to ensure competition and fair play. Together we resolve that a great nation must care for the vulnerable and protect its people from life’s worst hazards and misfortune.”

Few disagree with the ideas of ‘competition and fair play,’ but it raises questions when he implies that without these “rules to ensure [them],” a free market approach will fail.  A free market health care system, with limited government intervention can more efficiently allocate resources and provide the American people with better and more cost efficient options. An example would be the Affordable Care Act (ACA). With the ACA currently being implemented, the American people can expect to see an increase in their taxes from an increase in payroll tax due to the higher Medicare costs. Starting in 2013, the ACA will increase the Medicare hospital tax by 0.9 percent and increase capital gains taxes by 3.8 percent on those making more than $200,000.

Referring to health care costs, the President also mentioned that there would be “…hard choices to reduce the cost of health care and the size of our deficit.” This is true. The Heritage Network’s “12 Days of Obamacare Surprises: Deficit Reduction?,” points out that the ACA will cost the American people more than they had expected. The Congressional Budget Office states “The ACA contains a set of provisions designed to expand health insurance coverage, which, on net, are projected to cost the government money…. By repealing those coverage provisions of the ACA, over the 2013-2022 period, H.R. 6079 would yield gross savings of an estimated $1,677 billion and net savings (after accounting for the offsets just mentioned) of $1,171 billion.”

The President also stated that “The commitments we make to each other through Medicare and Medicaid and Social Security, these things do not sap our initiative. They strengthen us. They do not make us a nation of takers. They free us to take the risks that make this country great.” What the President leaves out, however, is that the amount of money being paid into these programs falls far short of the money required to sustain them.

According to Kaiser Family Foundation, Medicare accounts for a total of 21% in national health care spending in 2012. Congressional Budget Office projects that Medicare spending will increase from $560 billion in 2011 to $1.1 trillion in 2022 because of the increasing health care costs and population.

Also, the states can expect to see an increase of 2.9 percent in Medicaid expansion due to the ACA. A study from Kaiser Family Foundation estimates a total cost of Medicaid expansion of $1.03 trillion dollars between the years of 2013 and 2022. The Medicaid expansion under the ACA will attract new enrollees up to 21.3 million people, which includes the 14.3 million newly eligible Americans and the 7 million people who have yet to sign up for the program.

Since the beginning of 1970, Social Security benefited 25,700,924 American people. It has largely expanded since then and has calculated a total of 55,404,480 beneficiaries in the year of 2011. Financing social security comes primary from pay roll taxes, 82.8%. The 2012 Trustees Report estimates that only 75% of Social Security will be covered and has paid more expenses rather than has collected in taxes.

Spending by Social Security, Medicare, and Medicaid alone will outpace spending on all other federal programs.

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One thought on “Healthcare in Obama’s Second Inaugural Address

  1. Reblogged this on Public Issues and Public Health and commented:
    As a healthcare policy intern at American Action Forum for the spring 2013, I’ve started to write for their healthcare part of the Policy Interns blog. I will start re-blogging from their posts! It is my original work; I update it once a week! The opinions and views are of my own. Blog posts are my own thoughts and perspectives.

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