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Obama's Damaging Admission

April 17, 2013 in Economics

By Michael F. Cannon

Michael F. Cannon

Buried deep within President Obama’s $3.77 trillion budget is a tiny little proposal to increase Medicaid spending by $360 million. In a budget as large as this one, $360 million is scarcely worth mentioning. It amounts to less than one-hundredth of one percent of total outlays. But this 0.01 percent is worth mentioning, because it proves the president’s health-care law will not work.

While many uninsured patients pay their medical bills, the Medicaid program offers “disproportionate share hospital” payments to hospitals that treat lots of patients who don’t.

The president’s Patient Protection and Affordable Care Act cuts Medicaid’s DSH payments, beginning with a $360 million cut in 2014. The theory went like this: When the PPACA begins reducing the number of uninsured, hospitals won’t need those subsidies. In his budget, however, President Obama proposes to increase Medicaid DSH payments by $360 million in 2014, effectively rescinding next year’s cut. This deceptively small item has far-reaching significance. With this proposal, President Obama has admitted that:

1. The PPACA is not likely to reduce uncompensated care in 2014.

A central argument in favor of the PPACA was that it would end the “hidden tax” that uninsured individuals impose on the insured.

Supporters claimed that hospitals shift the cost of treating the uninsured to private insurers, which increases premiums for a typical family by more than $1,000 — a wild overestimate, but I digress. They argued that the PPACA’s Medicaid expansion and health-insurance “exchanges” would extend coverage to some 30 million previously uninsured people, thereby eliminating that hidden tax and enabling Congress to reduce DSH payments.

An item totaling 0.01 percent of the budget proves that Obamacare won’t work.”

The president’s budget shows that not even he buys that argument now. It states: “To better align DSH payments with expected levels of uncompensated care, the Budget proposes to begin the reductions in 2015, instead of 2014.” That is, the president expects that the Medicaid and exchange subsidies won’t eliminate that $360 million of uncompensated care next year. And it’s not because some states are choosing not to expand Medicaid — he proposes to rescind the cuts even in states that are expanding it.

2. The PPACA won’t reduce the deficit.

Rescinding the DSH cuts demonstrates why the health-care law’s supposed “deficit reduction” is a mirage.

Washington has a bipartisan tradition of overspending in the current …read more
Source: OP-EDS

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