Universal healthcare is coming.  President Obama has promised us that by the end of July we would see it.  We’ve spoken with Senate and House leadership and we’ve been assured that to some extent they will vote for it.  We understand the Constitutional implications but do we understand the cost implications? President Obama’s healthcare program is projected by the Congressional Budget Office to cost between $1 Trillion and $1.5 Trillion just in the first 10 years.  That works out to an annual cost of between $100 billion and $150 billion per year or between $274 million and $411 million per day.  To put that in perspective, $100 billion per year would pay the annual budget for the departments of Housing and Urban Development ($52.3 billion), Energy ($23.3 billion) and Justice ($25 billion).  But are these numbers even accurate?

Most of us remember 15 years ago when Hillary Clinton submitted her healthcare plan at a cost of $1 billion dollars per day.  According to government reports that measure medical inflation, prices for healthcare have gone up by 80%.  The Obama administration has set its aim just as high and yet this estimate comes out between 27% and 41% as high as the cost of Hillarycare in 1993. Without even factoring in population growth the inflation suggests that Obamacare should cost in the neighborhood of $658 billion per year or $6.6 Trillion over the first 10 years.  For reference, our Social Security liability is $13.6 Trillion.  

So how can the Obama administration claim that it will shrink the cost of nationalizing nearly 20% of the American economy?  Mandates and regulations will shift the cost more and more to the private sector to hide the rise in costs.  Administration officials have spoken eloquently about “cost control” being a major step toward affordable government insurance.  Obama has touted Healthcare IT as a major step toward achieving these cuts but without changes to regulations or the ability to create a single information form, this would only reduce costs by .3% leaving the main source of cost savings as direct rationing of healthcare through a harmless sounding concept called “comparative effectiveness research”.  This sort of process would allow government bureaucrats to delay and deny care on the grounds that it is not effective.  There will also be indirect rationing through tightening the reimbursement of providers.
  
In 1966 when Medicare was conceived its cost was $3 billion a years and “conservative” estimates projected that the cost would be $12 billion per year by 1990.  In 1990 Medicare costs were 9 times that “conservative” estimate, topping out at over $107 billion annually.  How can we honestly expect a government to keep costs down with a government run national healthcare plan when they have run up Medicare Parts A & B to unfunded liabilities of $68 trillion dollars and added to that with another $17.2 trillion in Medicaid part D (prescription drug coverage) in 2003?

Concerns are also mounting over the true scope of a “nationalized healthcare plan”.  The Senate’s plan, touted as Senator Ted Kennedy’s work with the administration will cover 16 million more people than are currently covered at a cost of $1 Trillion over the next ten years on top of our current Medicaid spending of nearly $500 billion per year and accounting for 22% of our current nationwide healthcare expenditures.  At the recent AMA speech Obama touted the $950 in tax increases and budget cuts (mostly tax increases) that would get us “almost all the way there” to covering the cost of this massive plan.  Unfortunately the CBO isn’t as optimistic about the Senate plans cost.  It weighs the plan in at a hefty $1.6 Trillion, a cost that Sen. Olympia Snowe (one of the three Republican Senators who voted for the Obama stimulus package) described as “a jolt of reality”.  Thanks Senator Snowe, where was that jolt in February?  Adding to concerns about the fiscal sanity of the Senate bill is the fact that while finance committee chairman Max Baucus is putting together a bipartisan group of Senators, Chris Dodd has been quoted as saying “My goal is to write a good bill” and “My goal is not bipartisanship.” So much for all the “civility and integrity and the bipartisanship that goes with that...” Nancy Pelosi called the congress to do.

Worse still is the plan in the House which has not yet been given a price tag.  That bill would require the HHS Secretary to establish a “public health insurance option” to compete directly against private plans in a national insurance exchange.  It would also raise the existing Medicaid program eligibility past the current threshold of 133% of the poverty line (currently $17,600 per year for a family of 3).  The public plan would pay providers based on Medicare payment rates plus 5% and could result in up to 113.5 million people losing their private insurance coverage.  The plan also calls for shifting costs to private plans or taxing insurance benefits at the employer level at a rate of $460 per person in order to reduce to “visible cost” of the plan.  Provider revenues would decline significantly and with the included individual mandate to obtain “acceptable coverage” or face a tax penalty of 2% of their income, personal liberty would be restricted at an unprecedented level. 

There are also questions about how many people are truly uninsured.  The administration has been claiming that if insurance is affordable, more people will buy it but unfortunately the evidence says otherwise.  Of the 47 million people the administration points to as unable to afford care, 20 million of them are college students or people making over $75,000 or more per year but choosing not to sign up for a healthcare plan.  Another 10 million plus are not U.S. citizens and 11 million more are eligible for state Children’s Health Insurance Program and Medicaid but have not signed up for the programs.  That leaves between 10 and 15 million people who are long term uninsured and that is manageable under the current private charities setup to deal with this problem.  If the government really must be involved, we could give the 10-15 million uninsured vouchers or debit cards that would allow them to choose their doctors and provide them with coverage.  We could even give them health savings accounts for retirement and according to some experts this approach would cost just $25 billion per year.