Cheap Health Care Not So Cheap After All

Peter Suderman | July 2, 2009

Did the Senate Health, Labor, Education, and Pensions (HELP) Committee figure out a way to provide most Americans with health insurance coverage for a lot less money than anyone thought possible? That's what a quick read of some news items seems to suggest. But it's not exactly true.

The AP is reporting that the HELP committee has brought the CBO score of their revised health-care bill down to $600 billion, and that the new bill will cover 97% of America's legal population. The first version of the bill was scored at $1 trillion, and was projected to only cover about 16 million people.

But as The New Republic's Jon Cohn notes, the new numbers are somewhat misleading. The expanded coverage numbers aren't possible unless you also factor in an expansion of Medicaid that isn't included in the $600 billion price tag — an expansion that will probably raise the total cost to between $1 and $1.3 trillion. So it's incorrect to say that the bill would cover most Americans for only $600 billion.

Cohn says the outlays will be deficit neutral, but as the Spectator's Phil Klein points out, there's considerable disagreement over how to raise the revenue to pay for all of this. And of course, there's always the Senate Finance Committee, which is in the midst of revising its health-care reform bill, to think about too.

The obvious upshot of all this is that it'll put a solid wind in the sails of a reform movement that's been roughing fairly stormy waters for the last two weeks. But some of the reform movement's newfound energy will no doubt come from excitement about numbers that don't tell the whole story.

Elsewhere at Reason, John Stossel argues that there's no such thing as free health care.

Comments

|7.2.09 @ 12:47PM|#

And yet, a lot of people won't realize they just moved the goalposts.

Did you hear that Michael Jackson died? I wonder what they're going to do for a memorial. I hope they cover that one the evening news. It's important stuff...

Jordan|7.2.09 @ 1:43PM|#

Cohn says the outlays will be deficit neutral...

This guy's the intellectual heir of the jackasses who assured everyone that Medicare would be self-funding. Now it is an unfunded liability greater than the economic output of the entire planet.

|7.2.09 @ 8:24PM|#

The independently-funded healthcare policy research organization, The Commonwealth Fund, compared possible savings 'a health insurance exchange' could bring under three different scenarios. One would include a Medicare-like plan along with private insurance. Another would instead offer only a government-run plan with rates somewhat higher than Medicare. The final one would be private insurance with no government plan at all.
Commonwealth's study found cumulative health system savings between 2010 and 2020, compared with projected trends for that period, would range from $3.0 trillion under a Medicare-like plan along with private insurance paying providers at Medicare rates in competition with private plans, to $2.0 trillion for a public plan paying providers at rates between Medicare and private plan rates, to $1.2 trillion in the private plan-only scenario. All three options would help insure nearly all Americans, it said, with the number of uninsured dropping to about 4 million people by 2012. 'Such an exchange' would offer a central point for consumers to shop for and compare health plans.

Under the Medicare-like plan along with private insurance, all U.S. residents would be required to obtain health coverage. The plan would establish a new government-sponsored health program for people younger than age 65 who are not eligible for Medicare. More than 40 million people would be expected to enroll in the program, according to Cathy Schoen of the Commonwealth Fund.

The government-operated insurance exchange would be similar to an existing program in Massachusetts and would allow people to compare coverage offered by private insurers and the new public program. In addition, the plan supports wide adoption of health information technology, better disease prevention efforts and 'changes to the insurance payment system' that promote efficiency. Health spending would continue to increase under the plan, but at a slower rate than current projections over the next 10 years. The Commonwealth Fund said the plan would reduce annual health care spending growth from a projected 6.7% to 5.5% and save a cumulative total of about '$3 trillion' by 2020, adding a national health insurance exchange program that includes a federally managed health insurance option could potentially save $1.8 trillion more than a plan consisting only of private plans.
The group's analysis assumed other changes would also be made to the U.S. healthcare market. These include an expansion of existing government coverage and new regulations that would require insurers to cover a wider range of consumers. Hospitals and doctors would also see their revenues grow with any of the three exchanges but at a slower rate, the report said.

The proposal's advocates have argued that a government-sponsored insurance plan would offer the 46 million uninsured Americans an affordable alternative to costly private insurance, adding that It would provide a strong incentive for private plans to strealine, innovate and compete.

Thank You !

|7.2.09 @ 9:14PM|#

What do I need to do fight Congress and Obama about this nationalized worthless healthcare?
Joe

|7.3.09 @ 8:20PM|#

Joe,

There's a website called Freemyhealthcare.com You can sign their petition.

|7.3.09 @ 9:13PM|#

Make that Freeourhealthcarenow.com