2010 March 22 Monday
How Expensive The Latest Medical Entitlement?

Ezra Klein makes light of the size of the latest medical entitlement expansion.

To get a more accurate annual figure, look at a year in which the bill is fully operational. In, say, 2016, the bill's spending will be about $160 billion (you can find these numbers on page 22 of the CBO report). According to the Center for Medicare and Medicaid Services, total health-care spending that year will be about $3.7 trillion. In other words, the bill's spending is equivalent to about 4 percent of what we'll spend in health care in a year, and it will be covering 30 million people.

But this bill will expand the US deficit by $562 in the next 10 years and the deficit expansion will be larger later in the decade.

The camel's back is already full and the camel is visibly sagging. The latest piling on weighs a lot more than a single straw.

Klein argues that the problem with health care is the 7% annual growth rate. True enough. But where's the will to address that? This latest bill just increases the number of people who are not cost sensitive to how much health care services they consume. So the bill makes the problem worse. Expanding insurance is the exact wrong direction to go. Rather than low deductible insurance we need high deductible catastrophic insurance and health savings accounts so that people feel like they are spending their own money when they for treatment. But Klein's fellow Democrats see high deductibles to their desired ultimate goal of single payer government funded health care.

America has reached a stage of imperial overreach. Too costly military interventions abroad, a massive exporting of debt in exchange for imported goods, a pile of unfunded entitlements liabilities, and now this. Our demographic condition is deteriorating due to both an aging population and importation of tens of millions of poor unskilled peasants whose children do poorly in school and in the work place. America's energy balance has been deteriorating since US peak oil production in 1970. World peak oil is coming in this next decade.

The pull back from our overextension will come in a sovereign debt crisis and economic downturn that be much more severe and harsh than what the current recession has done so far.

Share |      By Randall Parker at 2010 March 22 10:01 PM  Economics Health

James Bowery said at March 22, 2010 10:23 PM:

Just hire bitter minorities and women in secure, cushy, civil servant jobs that have full medical and dental coverage with a "fartin' through silk" retirement plan, so they can taze the doctors in vengeance for noncompliance with federal measures to bring down healthcare costs. Better yet, hire H-1b doctors and nurses to administer the shocks. They'll do it for lower wages and probably won't even take that many of the civil servant jobs immediately.

AMac said at March 23, 2010 3:08 PM:

Ezra Klein writes, "On the one hand, that $900 billion -- or, more precisely, $940 billion in the final legislation -- is stretched over 10 years."

I hesitate to call him, in effect, a liar--he may well not know enough to realize the problems with the story he's peddling.

For instance, the CBO doesn't score the likely or probable effects of the legislation, but the *stated* effects. And it works with the assumptions that Congress tells it to work with.

The $940 billion is a Garbage-Out figure. Everybody knows that, or should know that.

"$500,000 mortgage, 2% teaser rate, interest-only -- why that's a payment of only $833 a month! Sure you can afford that!"

What could possibly go wrong?

dave.s. said at March 23, 2010 6:02 PM:

More cost-insensitive consumers? I have my doubts. Effects are going to be interesting: at this point, most Americans fear losing their insurance because of a job loss or being denied coverage because of a pre-existing condition - but that goes away, under the bill. You wait til you get breast cancer, then you sign up. So you now, as a citizen, have the insurance aspects of this, and you can choose whether to buy the health maintenance services. The fines for not buying insurance are so low, and for not providing as a small business are so low, that there will presumably be a lot of folks who make a rational choice to go bare. Then what? You will have a lot of middle-middle class people shopping health services by price, who up to now haven't, because they have been maintaining their health maintenance plan because it is also insurance against catastrophe.

Doctor x charges $60 for a preschool physical? I will go to Doctor y for $45. There is a pretty substantial cash sector for cheaper medicine patronized by illegals already (at least here in DC), this will grow, as will doc-in-a-box. This is not that the writers of the bill intended, but I think it's what will happen.

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