Cost of Health Care

Yesterday my dad said that Obama's health care plan would cost over a trillion dollars a year (and would bankrupt America). So, I did some investigating. The short of it is that Obama's health care will cost less than the wars in Iraq and Afghanistan. Here are the details (and I did this quickly so please tell me if you see a mistake):

Multiple sources say that Obama says it will cost about $60 billion/year.

A CATO institute (a conservative think tank stuffed full of republicans who hate Obama) article said:

• "neutral sources" say the cost will be $110 billion/year

• also cited a Health Systems Innovations estimate of $600 billion

The Heritage Foundation (another conservative think tank) had an online article that said:

• Lewin Group estimated the cost at $571 billion over 9 years [so $63 billion/year]. They also said the total cost of all health care would jump to $1.17 trillion over 9 years [so $130 billion/year].

• HSI estimates the Obama plan would cost $452 billion per year. The Heritage Foundation says they have a higher estimate because they are assuming mandatory coverage of children

• TPC projects the Obama plan would cost $1.6 trillion over 10 years [so $160 billion/year]. However, Heritage Foundation says the TPC model did not account for any of the savings measures in the plan. (For a review of the savings built into the plan, see the Wall Street Journal article comments below)
  

A Wall Street Journal had an article that said:
Obama's plan is predicated on a philosophy that "If the highest spending areas could be sanded down to the lowest spending areas, about 30% in "waste," or $700 billion each year, would be saved. More than enough to pay for ObamaCare." However, the author seemed skeptical.

So, for those watching Fox news let me break the news to you--Obama care will not cost over a trillion dollars a year. Not even the conservative pro-republican think tanks are estimating it to cost that much. The real cost is somewhere between $60 - $110 billion/year.

Part of the confusion, I should add, is that Obama-haters do two things to misrepresent the facts: (1) they throw in the pre-existing costs of medicare and medicare that cost over $500 billion to inflate the cost of Obama's plan, or (2) they toss out a 9-10 year figure in a conversation about the annual (1-year) budget. In reality, Obama is cutting those costs and then adding on some new things for a total increase of $60-$110 billion.

So what do all these numbers mean? To give you some perspective on all this, the US spends over $600 billion/year on the military. The next biggest spender after the US is China at $65 billion/year. We spend ten times as much as the next biggest spender (and more than the rest of the world combined)--that is crazy! The 2008 fiscal budget (it was all I could find in my quick review) shows that Iraq ($149.2 billion/year) and Afganistan ($32.8 billion/year) cost a total of $180 billion/year.

So, Obama's health plan (costing between $60-$110 billion/year) will cost 1/6 what the total military expenses cost and about half what the war in Iraq and Afghanistan costs.

Now, I'm not saying we need to pull out of Iraq and Afghanistan--maybe we do, maybe we dont. What I'm saying is, Obama's proposed health care plan costs less than the current wars so IF we have to make cuts (and I think we do--we spend way too much money) we need to look at the whole picture and consider which is more important--a $60-$110 billion/year health program or a $180 billion/year war in the Middle East. I think they are both very important, but if I had to chose I'd choose health care for Americans over bullets for foreigners. Ultimately, I think we probably need to do something extreme to cut medicare/medicaid, military spending, and social security in order to balance the budget. What angers me is that democrats blindingly say "you must cut the military budget" and republicans say "you must cut health care and social security." Hello? Isn't it obvious we need to cut it all?

So, if we need to cut the budget, is this the time to spend $60-$110/billion on a new health care program? Well, I'd say yes (go ahead, call me a hypocrite), only because we really need this health plan and I hope (maybe ignorantly) that if we do it we will be forced to make cuts elsewhere to compensate--if not now then soon. Health care is long overdue, and I dont want to lose this short window of support (Clinton's efforts to do this failed).

Regardless, as we continue spending we're likely to see a conservative backlash with a Republican Congress (and maybe even a president) who begin to cut things for us (thank goodness!). I'd be happy about that, as long as we get the health care program in there first. They will be able to trim it later, along with everything else, but the essential program will survive and 50 million Americans need doctors a heck of a lot more than foreign wars.