Do you remember the word problems you had in junior high? Here’s one for you.
“If you spend $2 trillion per year providing healthcare for 254 million people, how much will you spend per year providing healthcare for 300 million people?”
Let’s see. If you divide the total current cost ($2 trillion) by the number of people, you get the cost per person or $7,874 per person. Multiply that by 300 million to get the cost to insure that many people or roughly $2.362 trillion, a difference of roughly $362 billion per year. In other words unless we stop doing something that we’re doing now every year we’d need to spend an addition $362 billion to provide healthcare for the uninsured.
That’s the sort of number you’ve got to keep in mind when you read things like this editorial from the New York Times:
The pledge by leaders of the nation’s hospitals to save the federal government $155 billion in health care spending over the next decade is a start, but still less than this hugely expensive and bloated industry should be contributing to help cover the uninsured.
The proposed savings are $70 billion less than the Obama administration had first suggested and $15 billion to $80 billion less than the hospitals are projected to earn if anything close to universal coverage is achieved.
On an annualized basis the representatives of the healthcare providers are pledging roughly $15 billion per year. Healthcare providers account for more than half of all healthcare expenses. Said another way, the healthcare providers are telling us that we shouldn’t expect to reform healthcare on their backs. As I’ve been saying all along it’s unreasonable to expect healthcare providers to take a voluntary pay cut.
That $15 billion per year which, sadly, comes in the form of promised economies which may never materialize, accounts for about 5% of the amount needed. Where will the other 95% come from?
A lot of it will need to come in the form of taxes.
I recognize that my little word problem is enormously over-simplified. The 46 million uninsured aren’t without healthcare. They’re without insurance. But remember this: the cost of health insurance is proportional to the cost of healthcare. It can’t be any other way. To make major reductions in the cost of healthcare insurance you’ve got to reduce the cost of healthcare itself.
And the cost per person of healthcare is rising fast, faster than the non-healthcare rate of inflation. Unless something happens to change that the cost per person will soon rise to $8,000 per person, $9,000 per person, or beyond. Providing healthcare insurance to the uninsured alone won’t change that.
While I’m on the subject you might want to take a gander at Jerry Remmers’s post on healthcare reform at The Moderate Voice. I don’t agree with everything that Jerry has to say but the articles he links to in the post are very interesting.
Update
Also, you should read the Wall Street Journal article on how Masschusetts’s system of universal healthcare is being gamed. Not particularly surprising given that enormous loophole with no apparent means of enforcement.
