In the House Budget Committee, the Experts Expose the Fiscal Consequences of Obamacare

Kathryn Nix /

On Wednesday, the House Budget Committee convened a hearing to explore the fiscal consequences of Obamacare. Lawmakers heard from Richard Foster, Chief Actuary at the Centers for Medicare and Medicaid Services (CMS); James Capretta, a fellow at the Ethics and Public Policy Center; and Dennis Smith, Secretary of the Wisconsin Department of Health Services.

Foster’s remarks echoed the findings of the CMS Actuary’s report released last April. Of the promise that “if you like your current insurance, you can keep it,” Foster claimed that this would be “not true in all cases.” His analysis shows that 7 million Medicare Advantage beneficiaries will have to seek other coverage, and Americans with all types of coverage could be subject to displacement from their current plans.

When asked if Obamacare would reduce steep growth in health costs—a central promise of the President’s health plan—Foster responded that this claim was “false, more so than true.”

Rather than bend the cost curve downward, Obamacare will increase overall national health expenditures by $311 billion. It won’t reduce the cost of federally run programs: The new law expands Medicaid, and though it includes sweeping cuts to Medicare, Foster warns that these are unsustainable and could threaten seniors’ access to care if fully implemented. Finally, the law increases premiums, failing to reduce costs on all fronts.

Obamacare also fails to address the federal spending crisis facing the nation in coming decades as a result of the skyrocketing costs of federal health programs. Instead, as Capretta explains, “at a time when the federal budget is already buckling under the weight of existing entitlement programs, the new law stands up three new ones which will enroll tens of millions of Americans into taxpayer-financed programs promising permanent access to uncapped benefits.”

The negative fiscal consequences of Obamacare won’t be felt solely in Washington, Dennis Smith points out. In Wisconsin alone, state spending will face a net increase of $433 million between 2014 and 2019. All told, Wisconsin taxpayers will face $560 million in new costs, despite the fact that the state already has a higher insurance rate than will be achieved nationally under the new law. Obamacare is projected to bring the insured population to 94 percent of all Americans; 95 percent of Wisconsinites already have insurance.

Indeed, in the Badger State, the cost of Obamacare will far outweigh its benefits for a majority of residents. According to Smith, 457,000 Wisconsin residents will be displaced from their current coverage. Premiums in Wisconsin’s individual market will go up 6.6 percent on average (and significantly more for younger individuals) and choice among health plans will be reduced.

Moreover, says Smith, “46 percent of individuals who will move into public subsidies either through Medicaid or the new tax credit entitlement already have private coverage. When you add in the federal “buy out” of existing state coverage, a substantial amount of the new federal spending will simply replace federal dollars for existing private sector or state dollars without insuring a single new individual.”

The example of Wisconsin highlights how ineffective a one-size-fits-all federal overhaul will be. One of Obamacare’s main goals is to increase coverage, but in a state with already high rates of insurance, reform would be better off addressing other priorities.

The Budget Committee hearing laid bare the fact that Obamacare will fail at several key components of its mission. The new law ignores existing problems in the health care system while creating countless new ones for all Americans.