Obamacare Increases Unemployment, Insurance Premiums, Deficit, and Debt

Kathryn Nix / March 17, 2010

President Barack Obama and congressional leaders claim that the Senate health bill, which will likely face a vote in the House by the end of the week, will decrease the deficit and bend the cost curve related to health care spending.  However, recent analysis by The Heritage Foundation’s Center for Data Analysis (CDA) shows that this is far from true.  Instead, the bill’s mandates and numerous new taxes will have tumultuous effects.  Passing Obamacare will come at the expense of the American people as it would grow the federal debt, increase premiums, and stifle economic growth.

The Senate bill would have disastrous effects on the economy and federal spending.  CDA shows that the bill:

• Increases the federal deficit and national debt. The Congressional Budget Office shows deficit neutrality for the Senate bill—however, this is based on static analysis which ignores the effects new taxes and an individual and employer mandate would have on economic growth.  These provisions would decrease investment in the economy, resulting in lower wages and salaries.  This means less taxable income, lowering federal revenues and growing the debt. Increased borrowing puts upward pressure on interest rates causing some private sector productive investment opportunities to be foregone.  This also increases the interest owed on the national debt, such that the government would pay, on average, $20 billion more in interest between 2010 and 2020.  By the end of the decade, CDA estimates the publicly held debt would be $755 billion dollars more than under current law. (more…)