Thursday, August 6, 2009

$ The cost of Health Care reform

You've probably heard it said by critics that health reform will cost taxpayers at least a trillion dollars. This sounds scary, which is the intent of the critics, but it turns out not to be true!

The quoted figure is not a trillion dollars a year, but rather a trillion dollars over 10 years. On a yearly basis, the cost equals approximately $140 billion dollars. To put this in perspective, the Part D Medicare Drug plan passed during the Bush presidency is about 600 billion dollars for drugs alone.

$140 billion dollars a year still overstates the cost, however. That is because other parts of the reform plan result in savings for Medicare, such as the reduction of subsidies to private insurers, reform of payment rates for doctors and a decrease in payments to hospitals for providing "free care" to the uninsured. When all of this is taken into account, the net increase in government spending for health care will likely be about $100 billion a year, which is a one-time increase equal to less than 1 percent of US national income, which has historically grown at an average annual rate of 2.5 percent every year.

While criticizing, right wing critics have stood against ideas to improve care and lower costs. For example, a plan to fund research which gives doctors, patients and health plans better information on what works and what doesn't, Republican critics have claimed a sinister plot to have the government decide what treatments you will get. Using this kind of perverted logic, a proposal that Medicare pay for counseling on end-of-life care is transformed into a secret plan for mass euthanasia of the elderly. There are many other examples.

Please, don't take hysterical criticism at face value. The truth is more complicated, but also reassuring.


Greta said...

Why do they talk about 30% waste and then say they need more money. Get the waste out and you have trillions in a healthcare system spending 17% of the GDP. Doc, you sure why you think this is a good plan in any way. Primary Care has no real benefit in this plan unless your total base is heavy medicaid and you get some boost there.

As to the savings in medicare, when the subsidies are reduced, doesn't that mean the insurance companies will reduce the benefits provided? Will the reform payment rates for doctors cut what you get today for a visit? Hospitals I know are hurting now without see a reduction in what they are paid in any way.

Anonymous said...

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