Court’s ruling upholding Obama’s health care policy could deepen the nation’s - and Kentucky's - debt hole

(BOWLING GREEN, Ky.) – Today’s Supreme Court ruling upholding the Patient Protection and Affordable Care Act (PPACA) – President’s Obama’s health care law – could exacerbate the nation’s health-care woes by offering a “spate of bad incentives,” said University of Kentucky economist John Garen, Ph.D., who also chairs the Bluegrass Institute Board of Scholars.

Garen warned in a recent Bluegrass Institute policy brief that the President’s plan would:

• Create state-based exchanges that force the healthy to overpay for insurance to subsidize the less healthy, in effect “taxing” one group’s health insurance to subsidize another group’s coverage.

• Subsidize the use of the exchange by low- to middle-income workers, creating another entitlement that taxpayers must pay for.

• Financially incentivize health insurers, who will  make money off the healthy and lose it on the sick to serve the former, but not the latter.

• Increase Medicaid spending, putting cash-strapped states in an even greater predicament.

• Cut Medicare funding and, as a result, services.

“We need market-led rather than government-driven reforms,” Garen said. “The President’s plan fails to address the inefficiencies that drive up costs while worsening the healthcare entitlement crisis. The latter is an important cause of the nation’s debt crisis and threatens our ability to reach the truly needy with healthcare assistance."