What's $1.6 Trillion?

Many Americans have been extremely agitated at the mere mention that health reform proposals as currently structured, may cost the U.S. trillions of dollars and sink us further into debt. The Congressional Budget Office has estimated that the Senate Finance Committee proposal would cost $1.6 trillion over ten years, and that proposal doesn’t even include the much maligned public option. But the “agitators” ignore the fact that the price tags mentioned are spread over ten years and that the cost of doing nothing or indefinitely delaying reform, ultimately will be much higher..

Compare this estimate with the Congressional Research Service’s May 2009 report that, including requested funds for fiscal year 2010 (beginning October 1, 2009), funding for the wars in Iraq and Afghanistan and other “global war on terror” initiatives since Sept. 11, 2001, would total more than $1 trillion. For fiscal year 2009 alone, Congress has allocated $941 billion for the “global war on terror;” and less than 1% of that allocation is targeted for veterans’ care.

Urban Institute analysts Linda Blumberg and John Holahan, in their study “Beyond the $1.6 Trillion Sticker Shock,” place the $1.6 trillion estimate in context by showing that the costs of health reform are less than 1 percent of the projected $187 trillion Gross Domestic Product, or GDP, as well as a small fraction of expected health care spending for that 10-year period.

What if we don’t enact reform this year? Then we can expect total health care expenditures, public and private, will total $33.0 trillion, over the ten years 2010-2019. “There would be considerable loss of employer coverage, particularly among the middle class, and a substantial increase in the number of uninsured, from an estimated 49 million in 2009 to over 60 million in 2019,” Ms. Blumberg and Mr. Holahan predict.

“The number of nonelderly people enrolled in Medicaid would increase substantially, from 44 million in 2009 to well over 50 million by 2019, increasing state and federal government costs appreciably,” they continued. “Because of the greater number of uninsured, the amount of uncompensated care that hospitals and clinics would provide would also increase dramatically, putting further pressure on government budgets. We estimate that Medicaid spending would increase over the 10 years by about $800 billion without reform and that the costs of uncompensated care would rise by about $250 billion.”

Furthermore, without health reform, employer costs would also rise substantially, as would costs from higher premiums and out-of-pocket costs to individuals and families, Ms. Blumberg and Mr. Holahan warned. As employer contributions to premiums rise, individuals and families would receive lower wages.

Since premiums for employer-provided health insurance benefits are tax exempt, if premiums for those benefits make up a higher share of total compensation, federal tax revenue would drop. “Thus, individuals would be faced with lower wages, higher out-of-pocket costs for premiums and cost sharing, new taxes to support higher Medicaid enrollment and uncompensated care, and a need to replace tax revenue lost due to growing employer contributions to health insurance.” And, many individuals and families would be uninsured.

The National Coalition on Health Care (NCHC), an alliance of large and small businesses, large labor, consumer, religious and primary care provider groups, and the largest health and pension funds, working to improve America’s health care, provides further statistical fodder.

The $1.6 trillion health reform cost over ten years seems a veritable drop in the bucket when we consider that national health spending is expected to reach $2.5 trillion in 2009, accounting for 17.6% of GDP, and in less than ten years, by 2018, is expected to reach $4.4 trillion—more than double 2007 spending.

Among other consequences, rising health care costs correlate to lower rates of insurance coverage, bankrupt families (62% of bankruptcies in 2007, even those with health insurance, 80%); lead families to lose their homes (1.5 million families annually).

Over the last decade, employer-sponsored health insurance premiums, and employees’ share of those premiums, have increased 119%. This increase has made it much more difficult for businesses to continue to provide coverage to their employees and for workers to afford the coverage. Total health insurance costs for employers could reach nearly $850 billion by 2019. Individual and family spending will jump considerably from $326 billion in 2009 to $550 billion in 2019.

“Without health care reform, small businesses will pay nearly $2.4 trillion dollars over the next ten years in health care costs for their workers, 178,000 small business jobs will be lost by 2018 as a result of health care costs, $834 billion in small business wages will be lost due to high health care costs over the next ten years, small businesses will lose $52.1 billion in profits to high health care costs and 1.6 million small business workers will suffer “job lock“— roughly one in 16 people currently insured by their employers,” the NCHC warns.

So, all things considered, what’s $1.6 trillion….