Tags: Obamacare | health | recession | costs

Obamacare Might Trigger the Next Economic Crisis

By Michael Carr   |   Friday, 08 Nov 2013 07:11 AM

Millions of Americans are discovering that benefits have costs when it comes to health insurance. They are also learning that when the federal government mandates free benefits, someone has to pay.

It is hard to believe so many people accepted the idea that health insurance can provide free preventive services without costs going up. Along with all the other benefits the government requires, consumers are facing sticker shock.

Worse than that, the country is facing a recession. Millions of people will be paying more for health insurance next year, and the government will also be spending more for Medicaid and subsidies that are hiding the true cost of the Affordable Care Act from a gullible public.

In reality, these costs will force cutbacks in other spending and this large shift in spending toward a less productive sector of the economy could tip the nation into a recession.

Tax increases are known to slow economic growth. Although Americans will be paying hard-earned dollars to health insurers instead of the government, the effect will be the same. Starting in January, when Obamacare bills come due for families, disposable income will drop.

Headlines are filled with horror stories, but if only 5 million families pay more, the impact could be a 1 percent decline in the economy. That assumes those families pay only $100 a month more for healthcare, on average. The real impact is likely to be larger.

A recession seems to be an unintended, but fully predictable, consequence of the health insurance mandates. Since the Federal Reserve is still battling the last recession and deficits should prevent massive government intervention, this recession could be worse than the last one.

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