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Contrary to His Inaugural Address, Obama Has Forced Us to Choose Between the Old and the Young

January 23, 2013

By Avik Roy

President Obama’s second inaugural address has been widely hailed (or panned, depending on your point of view) as an unapologetic defense of big-government liberalism. But despite the fact that his speech argued the contrary, Obama’s policy legacy is that future generations of Americans will fight each other for access to scarcer and costlier health-care resources.

"The commitments we make to each other through Medicare and Medicaid and Social Security," exclaimed the President, "these things do not sap our initiative. They strengthen us." A truly efficient system of universal coverage, such as that of Switzerland or Singapore, might indeed strengthen us. But even if you believe that Medicare and Medicaid are the model of efficiency—which they are not—the runaway costs associated with those programs are requiring higher and higher taxes to fund them. Eventually, higher and higher taxes do sap initiative, because they reduce the economic value of initiative.

"We must make the hard choices to reduce the cost of health care and the size of our deficit," Obama assures us. But when it comes to reducing the scale and growth of health spending—our country’s biggest problem—Obamacare represents, at best, tinkering around the edges. Its Medicare Independent Payment Advisory Board lacks the authority to make meaningful improvements to Medicare’s cost structure, such as improving the design of its co-pays and deductibles. Accountable care organizations, by accelerating the consolidation of hospitals and physician practices, will make health care more expensive.

President Obama has told House Speaker John Boehner (R., Ohio) that "we don’t have a spending problem" because we have a "health-care problem." The President isn’t wrong about that—the spending problem is about spending on health care—but instead of working to reduce federal health-care spending, Obamacare massively expands it.

Obama’s final inauguration comment about our entitlement crisis was that he and his followers "reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future." It’s Obama’s favorite rhetorical device: to describe a false choice between two irresponsible extremes, which he alone stands astride. But the rhetoric is in stark contrast to what Obama has actually done over the past four years.

The plan proposed by Mitt Romney and Paul Ryan to reform Medicare would have put that program on a path toward long-term solvency, without making any changes to the program for anyone over the age of 55. That plan reflected exactly what President Obama claims to support: continuing to care for the elderly, while ensuring that Medicare remains solvent for the future.

How did President Obama react to the Romney-Ryan approach? By shrieking that it would "end Medicare as we know it" and leave seniors "on their own."

By contrast, it’s Obamacare that creates a long-term collision between the law’s exchange-based, costly, subsidized health insurance for younger Americans, and Medicare’s unlimited subsidy of health care for the elderly. We can’t afford both, and over time, the inexorable fiscal math will force us to take a side.

There is still time to reform Obamacare into something resembling a fiscally stable health-care system. It involves significantly reworking Obamacare’s exchanges, such that young people can afford the insurance plans they will now be forced to buy. It involves rolling back Medicare’s subsidies for wealthy retirees by migrating younger retirees onto the reformed exchanges, by raising Medicare’s retirement age. And it involves encouraging governors to resist the temptation to irreversibly expand Medicaid.

The President’s inaugural rhetoric makes clear that he’s not particularly interested in finding common ground. That’s his prerogative, and GOP complaints to the contrary are a bit whiny. What Republicans should be focusing on instead is building the case for their own reforms, so that they can prove what Obama claims to believe: that it is possible to improve the way we care for our parents and grandparents, while also saving the country for future generations.

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