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Dean Baker's commentary on economic reporting

Health Care Reform Arithmetic for the Numerically Challenged

The Congressional Budget Office (CBO) came out with preliminary projections of the impact of Senator Kennedy's health reform bill. CBO had a projected cost of $1 trillion, with an addition 16 million people getting insured over this period.

Republicans were quick to put the cost at $62,500 for each additional insured person. This is a good joke, but has no place in serious policy discussions. The relevant question is the cost per year ($6,250). If the projections were done over 20 years, then the cost would be $125,000 per insured person using the Republican methodology.

It is also important to remember that the number of people who are uninsured at least part of the year is over 80 million. The generally used number of 45 million uninsured refers to the number of people who go the entire year without insurance. Presumably there will be a reduction in the number of people who are uninsured for part of the year as a result of the Kennedy plan.Serious analysis would take this into account also.

--Dean Baker



COMMENTS

People are uninsured all the time. My wife's position was eliminated last week, and poof, we are uninsured. Universal single payer health insurance would take care of this problem, everyone would be covered all the time. Besides the 30% savings by getting rid of insurance company costs and health care administrative costs for the insurance, you save by covering everyone. No emergency room visits because someone doesn't have a doctor or doesn't have insurance. The hidden cost of paying for the un and under insured is a huge savings with Single Payer.

You are spot on to say that the Republican numbers have no place in serious policy discussions. But the Democratic pre-existing condition that single payer is off the table likewise makes for a sub-par discussion.

GIVE MEDICARE/MEDICAID ITS OWN TRUST FUND, call Pelosi @1-202-225-0100. DEMAND SINGLE PAYER.

It's a bit sickening to me to even see these figures being tossed around, knowing it's just more wasted time and money along the inevitable road towards single payer, or systematic collapse. I wish we'd cut the crap and get there already.

For those with an interest in health care reform, there is a long, thoughtful, well documented article in the June 1 New Yorker magazine on the issue of COST of health care.

Turns out that one of the oft cited reasons -- malpractice claims, and resulting excessive tests, etc. -- can't be a serious cause. Texas, with caps on malpractice awards, has the city with the highest per-capita medicare cost in the US -- and with health result statistics that are worse than average.

Also turns out that the single payer solution may not save all that much UNLESS it leads to a way to attack the root causes of high health care -- not surprisingly the article concludes a principal cause is greed of everyone in the system -- hospitals, home health care agencies, testing labs, big pharm, etc. etc. and of course physicians.

Read it and weep as they say.

anyone who thinks that single payer is some kind of collapse is just an ignoramus. letsee...do other countries with single payer have exploding healthcare costs? nope. do other countries with single payer have worse health outcomes than we do? nope (we're among the worst). do you see large majorities or even large minorities in single payer countries complaining? nope. if they were, you'd see it all over fox news and cnbc. instead, we have 2 people from canada or something or a crock-doctor from britain. we can't have the french talking about their healthcare problems bc we'll quickly find ourselves saying "gosh, i wish we could get single payer and have the problems they do - it beats the problems with our own system!"

the argument against single payer fails on appeals to consensus or majority since 70% of americans want it, it fails on appeal to cost and efficiency since single payer is much more efficient and cost-effective. meaning that the only thing left for conservatives is talk of "big government." if conservatives agree to slash the military budget by at least half or two-thirds, then people will start taking the "big government, oh no!" talk seriously.

I think you misspoke when describing the debate over for-profit healthcare vs single payer, Dean.

You used the phrase "Republican methodology." Actually it should be Republican mythology. :)

Peace,
Cosmic

According to 2008 poll published in the Annals of Internal Medicine, 59% of US Medical Doctors support a Single Payer heathcare system. The poll was conducted by Indiana University’s Center for Health Policy and Professionalism Research. Single Payer was more popular among physicians than public programs simply to cover the uninsured, or an individual mandate to buy health insurance.

The relevant question is the cost per year ($6,250).

The relevant point is indeed the steady-state cost per year. But that's a little higher than $6,250, too. The bill takes about six years to ramp up, and for the all the subsidies to phase in. That's not that unusual for a program of this complexity, but it does mean that averaging the cost over the first ten years is misleading. The steady-state cost per year is going to be higher at the end of those ten years and for all years going forward than an average over the first ten years, when the program hasn't really kicked in for the first five.

In other words, the average over twenty years would look a lot higher than the ten year average.

The cost per person per year once the program is fully implemented is close to $9,000, not $6,000.

Look at the last page of the CBO's estimate. The charges for Exchange Subsidies rapidly ramp up starting in 2014, after almost no spending in 2010 to 2013. From 2015 onwards, the subsidies grow at a relatively steady pace (around 6.5% I believe, faster than inflation still but commensurate with health care inflation.)

The program also does not achieve its goals of reducing the uninsured until 2014, either. Once the subsidies reach their steady-state level, the rate of uninsured dips to 13% at stays there, but before 2014, when the subsidies and the program are not yet in full swing, the number of uninsured is higher.

It's inaccurate mathematics to use the total number of uninsured at the end of the program but the average cost over the entire ten years, when the program will not be effective (nor spend as much) in the first four years.

Problem is, that this new plan will impose costs on many lower income people. And for many, access won't improve. It might help if policy-makers would at least acknowledge this. But perhaps some of them are so cavalier, and so privleged, that they don't even know!

Right-wingers hate single-payer until they lose their job and get cancer.

It is also important to remember that the number of people who are uninsured at least part of the year is over 80 million. The generally used number of 45 million uninsured refers to the number of people who go the entire year without insurance.

This is also incorrect. Read the link that you cited, Dean.

80 million is indeed the number of people who do not have insurance at some point during the year. At any one point in time, 45 million do not have insurance. The number of people who go without insurance for the entire year is a third figure, about 24 million. (Table 2, page 6, indicates that 92.1% of people have insurance at some point during the year, which leads to the third figure.)

I appreciate your correct debunking of people making misleading claims by using the cost over an entire decade for reduction of the uninsured in one year, but you have made several mathematical and statistical errors of your own.

How many people do we have? Like 300 million?

24% of the public (72 million) don't have year round insurance.
Of those..

33% (24 million) have NO insurance, ever.

66% (48 million) are in insurance limbo.

Yea, so John Thacker is right, it would seem (good catch).

Just goes to show you that we all make mistakes. Even when pointing out other people's mistakes.

I still love you though, Dean.

Thanks John,

I was being careless.

dean

PLEASE someone just say it!

Other countries have better health care results, EVERYONE is covered, for UP TO 1/2 as MUCH MONEY!

I think you misspoke when describing the debate over for-profit healthcare vs single payer, Dean.

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