Is This What Ohio Really Needs?

By Marc Kilmer, policy analyst with Buckeye Institute for Public Policy Solutions

The Obama publicity machine was making a concerted effort to promote changes in our health care system last week. Health and Human Services Secretary Kathleen Sebelius was touting how “reform” would help individual states, like Ohio. It’s hard to see, though, how a bill that would deepen Ohio’s budget problems, subject hundreds of thousands of Ohioans to punitive fines and taxes, and deepen the deficit would help the state. I guess the beauty of this proposal is in the eye of the beholder.

There are many ways the health care legislation under consideration by Congress would raise the cost of health insurance and health care, but since these are hard to quantify let’s stick with some hard numbers to see how Ohioans would be hurt. In 2008, there were 1.1 million Ohioans without health insurance. All these individuals face fines if they do not obtain coverage. Certainly some will obtain insurance as a result of Medicaid expansion or the health insurance subsidies under this plan but there would be some who would not.

What is often overlooked in the discussion of the uninsured is that many choose to go without insurance. In 2008, there were 272,000 Ohioans who live in families making at least three times the poverty level who were uninsured. These families could presumably purchase some form of health insurance if they wanted. They chose to go without for whatever reason. Under the plans moving through Congress, they will be forced to buy a product they presumably do not want or pay high fines. Either way, this legislation will cost them.

Other Ohioans would be targeted for punitive taxes under the both the Senate and House health care bills. There are over 76,000 households that make over $200,000. Many of these would be subject to a new income surtax. The men and women in this income group are business owners and other members who are a vital part of Ohio’s economy. Their productivity will be penalized if this legislation becomes law.

Not only would many Ohioans be paying higher federal taxes, this federal legislation will also likely mean state taxes will need to be raised. Both House and Senate bills mandate that the state Medicaid program be expanded, which could mean as many as 519,000 new enrollees in this state. While the federal government would pay much of the cost for this expansion, state taxpayers would be required to fund part of it. One estimate puts that cost at $922 million over five years. With the governor and legislators struggling to find ways to balance the current state budget, it seems likely this new burden will mean even higher state taxes.

Ohioans will also be paying the price of these bills far into the future, as it is almost certain the legislation will add to the deficit. While proponents of the bills moving through Congress say they are “deficit-neutral,” independent analyses question this. The only way to assume these bills won’t add to the deficit is if the new health care spending stays within projections (something that rarely happens) and that Congress makes the promised future cuts in Medicare (something Congress has repeatedly refused to do).

Today the budget deficit stands at $1.4 trillion. Total government debt is 41% of our Gross Domestic Product (GDP). Under President Obama’s budget proposals, it will rise to 82% of GDP by 2019. This type of deficit spending isn’t sustainable; someone, someday, will have to pay for it. If this health care bill adds to the deficit that will mean even more debt for future generations to pay off.

No one is saying that this health care bill won’t help some people. Of course some Ohioans will benefit from it. But to evaluate it fairly, both benefits and costs should be considered. The amount of money this bill will require in new and future taxes is significant. Ohioans simply can’t afford the financial burden of this so-called “reform.”

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