Government subsidies

 Health care has been one of the most controversial topics in the USA in 2010. Given the effects of current US situations to the global economy, the United States health care has been spawning debates all over the world. President Obama’s widely-discussed law is having its magnitude of ramifications that it has gotten unpopular across America as many sectors have their own set of complaints. This paper shall discuss some of the economic consequences of the President Obama’s bill. It shall discuss the pros and cons of such law and whether it can have potential long term benefits for American citizens.

It was in March 23, 2010 when President Obama made the Health Care Bill a law (Lotich 2010). Health care is 1/6 of the American spending budget and the law is about 1000 pages thick (Condon 2009). The law is formally called Patient Protection and Affordable Care Act but the public has easily dubbed it the ObamaCare. The law provides a lot of new incentives and the cost of which are offset by higher taxes on some people. As always with anything new, the bill cannot take effect immediately, despite its signing in March. The effects of the bill cannot be felt in completion until 2018 even though Americans start paying for it in 2010.

Amongst the benefits of this law are as follows (my. barackobama. com n. d. ): • 48 million new Americans can have the option of availing low-priced, healthcare insurance options • Tax credits are extended to up to 29 million people to offset the some of the cost of the health care insurance (though this begins only in 2014) • “5. 6 million people with pre-existing conditions will no longer be denied insurance” (starting in 2010) • The new law aims to save half a million families from filing bankruptcy on an annual basis (health care is apparently the reason for 62% of filed bankruptcy in 2007)

• “Tax cuts for up to 3. 5 million small businesses to help pay for employee coverage” Marginal Analysis The report of the Congressional Budget Office (2010) concluded that ObamaCare can reduce the budget deficit of the US by $143 billion on the first decade of its promulgation and about $1. 2 trillion on the succeeding decade. This report says that there is an extremely positive slew of benefits that the ObamaCare can do within ten years of promulgation. This data of course, is based on quantifiable facts and given the sensitivity of this information; the margin of error of this report can be huge.

This section of the paper, however, will focus on non-quantifiable information that the report may not have addressed. The typical utilitarian approach to economics is that it is okay for as long as more people reap the benefits even at the cost of a few marginalized ones. In this ObamaCare, there seems to be quite a bit of people who will not be reaping the benefits of the plan and they of course are the victims to the utilitarian approach. For instance, section 1501 of the ObamaCare mandates that $750 annual fines will be imposed for those who do not want to avail of the health care (Hogberg 2010).

Section 2701 says that health insurance providers are not allowed to offer lifetime or annual limit services (Hogberg 2010). Lastly, beauty becomes more expensive by imposition of 10% indirect tax on tanning salons Hogberg 2010). Supply and Demand and Government Subsidy The neo-classical approach to economics says that demand will increase the price of a commodity, as well as shortage of supply and vice versa, low demand will drive the price down, as well as overstocks. For all ObamaCare’s self-proclaimed benefits, it seems that it has not addressed the root cause of the problem in health care.

For example, the average cost of giving birth in America is roughly $18,000 and this does not include prenatal care. The ObamaCare ‘reform’ has not touched the cost one little bit. Only now, instead of insurance paying the tab, the government does. The problem is still there, the cost is still high, all that has changed is how and who pays for it. The ObamaCare claims that it will provide health care insurances to some 48 million Americans, but truth to be told, these probably are the immigrants, as most Americans have their own insurance plans. People complain that if universal health care was instituted, it will be abused.

People will go to the doctor for every sniffle and ache but in many ways the system is already abused. Ethically and legally, the emergency room is not allowed to turn someone away. So a guy will ignore his sniffles because he has no insurance until he goes to the ER for pneumonia. Or, back to the issue of illegal aliens (who, again, cannot be turned away from the ER), they will go to the ER like someone with insurance will go to the clinic, wait for hours on end clogging up the wait for people that may need to really be seen, and then never pay the bill. Just because the ER cannot turn them away does not mean there is no bill.

It is really quite easy to be in debt for the rest of one’s life under medical bills. This is not a car that one should not have financed, or a house that the market does not support, or the TV that one just /had/ to have, this is one’s life, his health, and there is really no choice but to pay. It is not like the hospitals are heartless crooks. If a doctor tells a patient that he has cancer, but his insurance will not cover the treatment because he has been a smoker since he got the policy and they claim that that fact makes it pre-existing, and without money for the treatment, the patient will die, what is there to do?

Who is to blame, the doctor or hospital that is charging so much, holding the patient’s life or that of the insurance company that will not cover the cost because of a minor loophole? They are both just another company, and in a capitalist economy a company has one goal: making money. Not making people well, not promoting long and healthy lives, not the well being of the American people, but making money. Regulation is needed, but not the kind that was promulgated. Abuse of Medicare is already obscene and rampant.

Not minor, individual infractions, but true criminal enterprise. In recent years the number of drug related arrests in Miami, Florida has fallen. It has fallen because crooks are finding out that it is more profitable to scam Medicare than it is to deal in cocaine, and the penalties nearly nonexistent. And it is so ludicrously easy to do. Rent out a building, get it licensed as a retirement home, apply for Medicare funding for, say, 100 wheelchairs. According to federal mandate, Medicare must pay out the money within a month, in less than 30 days.

But because of the backlog, they often need up to 18 months to investigate the claim. In that time the phony business has closed up shop, moved down the street, and done it all over again . They make millions, more money than dealing drugs, and if they get caught, civil fines and maybe six months in prison and some slaps on the wrist. Obama should have focused more on the old demand and supply theories, just so health care costs could have gone down. Government subsidies will not likely address the problem.

It will just elicit more complaints from the already forlorn Americans. References: Condon, S. (2009). 10 Health Care Reform Myths. CBSNews. Retrieved 26 July 2010 from http://www. cbsnews. com/stories/2009/08/05/politics/main5215880. shtml? tag=contentMain;contentBody Congressional Budget Office. (2010). Estimated Budgetary Impact of the Legislation. Retrieved 26 July 2010 from http://www. cbo. gov/ftpdocs/113xx/doc11379/AmendReconProp. pdf Hogberg, D. (2010). 20 Ways ObamaCare Will Take Away Our Freedom. Investors. com. Retrieved 26 July 2010 from http://blogs.

investors. com/capitalhill/index. php/home/35-politicsinvesting/1563-20-ways-obamacare-will-take-away-our-freedoms Lotich, B. (2010). What Obama’s new health care bill means for us. The Christian Science Monitor. Retrieved 26 July 2010 from http://www. csmonitor. com/Money/Christian-Personal-Finance/2010/0325/What-Obama-s-new-health-care-bill-means-for-us My. BarackObama. com. (n. d. ). What Health Reform Means for All of Us. Retrieved 26 July 2010 from http://my. barackobama. com/page/content/benefitsofreform? source=issues

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