Wednesday, March 17, 2010

Health Care Math, Obama Style

Obama says we have 40 million people without health care and he wants to give it to them, by giving it to us (the taxpayer). My employer and I pay $400 dollars every two weeks for health insurance, that’s $10,400 per year. Multiply $10,400 times 40 million people and you get $416 billion dollars to insure them at my level. Let’s cut the estimate by 50% to 200 billion dollars a year. Figure that there are 150 million workers working. Divide the 200 billion by the 150 million workers. The additional revenue needed from each and every worker would be $1,333 on top of what they are already paying for health insurance.

Remember the 40 million people without insurance will pay nothing into the pot, they can’t afford insurance. So in order to fund this, the workers would have to kick in $1,333 to maybe $2,666 extra per year.

Our government in the past has been known to buy toilet seats for $1,000 and hammers for $800. The idea that government health care can be cheaper than the private health care we already have, is absurd, to say the least. To claim it will pay for itself boggles my mind.

There isn’t much math or thinking that went into this, it makes you wonder about the quality of our educational system and how it has prepared present day voters for the real world. If we cut the educational budget by 50%, that ought to double the number of Democrats in the voting system, given time (that worries me).  Our kids have to be taught, there is no free lunch, even though schools do have a free lunch program.  In order for government to give someone a dollar, they have to take it  from someone else.

If you do the math, the Congressional way, it's a little different. They already know that tax receipts for last year are down 40% (an educated guess on my part) and they need money, bad. Take the $10,000 per year in health care payments per employee and multiply it by 150 million workers. Whadaya get? 1.5 trillion dollars! Do you understand why Congress is so interested in passing the health care bill?  You think they will spend it on health care? Obamacare will be a box of band aids and a bottle of aspirin. This health care legislation is a tax hike of “Titanic” proportions----where’s an Iceberg when you need one.

23 comments:

JMS said...

I feel the same way. If I had to label myself I would call myself a "constitutionalist". I am not a true conservative. I do believe that healthcare has some serious issues that need to be fixed. However, I think we are going about this the wrong way.

The money generated from healthcare will be spent on other things similar to what happened to the social security fund, medicare and medicaid. It has all been spent on other crap since the supreme court labeled all that income a tax. If there was some way of not allowed the government to squander the money I would be okay with that. However, I don't have that kind of faith in the government. Maybe we can work something out similar to how public utilities are regulated? There is a cap to the profit and there is an agency watching over them. The PSC sure keeps utilities in line.

This is against my big government principles since it would create another government agency, but I don't have any other ideas.

I believe we can all agree that there is a serious problem. What would your solution be?

Jim in San Marcos said...

Hi JMS

Under the present circumstances, there is no solution. The government has been borrowing money on the assumption that it never has to be paid back (if they can pay the interest on the money borrowed).

If the interest rates go to %10 percent, we can't come up with the coin to pay the interest on 16 trillion dollars.


Entitlements already consume 60% of our taxes. That projects out to 80% down the road.

If they want to raise taxes, I'm OK with that, just don't call it health care.

They have already spent the Social Security trust fund and there are no real funds for Medicare. The health insurance is just some smoke and mirrors. It will all fall apart in 3 or 4 years. The government is broke, they gave out one too many free lunches.

Bankruptcy is probably the solution. This mess will trash the currency. From there, the game starts over. Not a pretty picture if you are retired.

An Inquiring Mind said...

Morning Jim,

Everyone should go onto the Campaign for Liberty site and sign the petition to stop Obamacare.

Obamacare/Healthcare is just an egotist (who is a Socialist and despises the US Constitution) trying to make a name for himself in presidential history, and Congresses way of getting more revenue.

Again, I reiterate... this government, big government... is the people's enemy.

We are on a spin, crash and burn course economically. The neo-Keynesians and Socialists are going to make a total mess of everything.

Be prepared to build a new country when the USA goes BK and there is a total systemic collapse. A new third party will come in and take over... it could be a benevolent one or a Hitleresque one.

Per history, crises like this often lead to wars or fascist take overs. Gulp!

We have no one to blame but ourselves. There will be a lot of regret that we should've all been more politically active locally and on a national level so that the politicians and criminals weren't allowed to run roughshod over America.


AIM

JMS said...

I agree with you AIM. I think there are two separate issues here. One is Obama's need for increasing taxes which he is calling healthcare reform. I'm not in agreement with that and with anything he is doing. He should call the pig a pig.

The other problem is with insurance companies dropping people at a time when they are needed the most. I believe it is wrong to pay an insurance company for years and then having them drop you once you get ill. I view this as paying for a service up front and then not recieving it. This is wrong and something should be done about it.

Shift said...

Hi,

Just a couple comments on your numbers.

* I (and my employer) spend about 14K on very good health insurance each year. This 14 K covers my wife, son, and I. This would average to less than 5K a year per person.

* If your wife is covered under your policy you should convert your per year cost of insurance per person to be about 5K.

* If you set the cost per year per person to be 5K we get your 200 billion dollar amount that you call a 50% cut to your estimate.

* This 200 billion dollars that is to be spent on covering the 40 million uninsurred has some double counting. You need to subtract all of the money that would have been spent on those people (e.g. emergency room visits) paid by medicaid. These people, without insurance, are still costing us money regardless of the proposed legislation.

Just trying to help you get a better estimate.

Rob in NS said...

Jim

Here in Nova Scotia we are further down the road than you guys on this so to speak. I read article today that reported that health care costs are increasing by 8 percent per year. Revenues are flat. One doesn't have to think to long to see where this is headed.

Shift said...

The estimates you are trying to do are probably much more difficult than any reasonable person might expect.

I found the congressional budget office numbers at
http://www.cbo.gov/ftpdocs/108xx/doc10871/01-26-Outlook.pdf
and found that we spent 251 billion on medicaid in 2009 (we spent 499 billion on medicare). This would suggest that the uninsured cost about 51 billion more than your estimate for them to recieve full health insurance coverage. This might be due to these people having much higher medical costs. Perhaps, once someone gets ill enough that they exhaust their current coverage and get financialy destroyed, the state must deal with them. I don't know. These numbers are HUGE.

frakrak said...

Hi Jim in this country everyone that puts in a tax return pays a 1.5 % medicare levy (business included) on their total taxable income, then if you earn over $73K you pay a further 1% surcharge, that is, if you do not have private health insurance!

A few years ago after the private health insurers were out for the count, the government gave a rebate to people to join private health, within a few months and after the numbers of people joining PH climbed, PH companies hiked the prices to a little beyond the rebate,,,,,,,, outcome was the federal government gave the PH companies a nice little slice of my wealth for nothing!!

I think America will be screwed royally with this, (royally because you still have a monarchy in the form of the Federal Reserve) At least your congress and senate go thru the motions of an election.

As soon as a government taxes, and redistributes this income you have socialism in some form. I must be socialist, although, I believe in small government; I believe governments should look after their citizens, but not at the expense of risking insolvency!

More importantly its citizens should look after its government, and Americans can do this by putting more pressure on that swill you call a government! By having the real debate of reform in the financial sectors, government, lobbyists and how they should be representing you and not the invisible American monarchy!!

I think you are right with the tax angle (smoke and mirrors) but this debate is taking pressure off what really should be on the agenda for the American people!!!!!!!!

At this point you have a government, get off your asses and use your numbers, governments and public protests = democracy.
Medicare is a well planned distraction from this….
cheers

frakrak said...

Probably went a little far there, what happens with you will happen or has happened here. By protests I don't mean violence in any form, I will stand by my comments though ...
cheers

Jim in San Marcos said...

Hi JMS

I've never heard of an insurance company dropping you when you get ill. I believe that my mother's policy had a 2 million dollar upper limit, and only 6 months of hospital care per year. She used all of it and more before she passed away.

A lot of people go without insurance and when they get sick, then they want to buy it. That's not how it works. With any health care plan, you start paying before you get sick. The collected premiums are paid to those in the group that later get sick.

If you know of an actual instance of the company dropping an insured with cause, contact the insurance commissioner for your state, they will read them the riot act. If a company messes up bad, it could be banned from further underwriting in the state and be held responsible for any claims.

Tyrone said...

And don't forget about the $5B we're spending per month on food stamps.

I propose we remove "In God We Trust" from all coinage and fiat paper, replacing it with...
"A Chicken In Every Pot".

This captures the essence of the 'nobody fails/loses' philosophy of the USA!
I LOVE IT!!!!

Anonymous said...

I should start thinking about buying a little home in Costa Rica, Panama or wherever I can get 2nd citizenship.
Set it up as a rental property for now but have it sitting there and waiting for me if I need it. Since the America that I know and love (meaning liberty, freedom, pursuit of happiness and prosperity, etc.) is eroding away there could come a time within the next 10-20 years where I just need to leave to protect my sanity, peace of mind and wealth. Once there and settled I can renounce US citizenship and escape the IRS and the growing hand of Fascism. Just come back and visit on a visa.

Future Expatriate

Jim in San Marcos said...

Hi Shift

Thank you for the added statistics. I hope no one was using my figures to win an argument. I was trying demonstrate that the actual costs range between 200 billion to well over 400 billion. With the government involved, I would double or triple the high end amount.

My wife's health insurance through her employer is 400 per month they pay it all. My insurance through my employer is 800 a month, of that I pay $230. If I wasn't working and wanted insurance under her plan, it would cost my son and I about $1,000 per month additional (I'm age 63).

My guess is that the 40 million uninsured are mostly between the ages of newborn to 40. Why pay for something you don't need? Obama will force those people into the health care payment plan. This additional revenue can be used on other programs.

The thing to remember here, is that the data can be factored in many different ways. The government has several plans as you mentioned that are not funded but are costs paid. A guy shot by the police is a 200k write off that Medicare pays. With health insurance, he's covered. So that bill would be covered by health care and not be paid for out of the general fund. Congress sees this as a reduction in costs showing health care insurance will save money.

The irritating thing is, if the guy shot, is a dope dealer, he's probably not covered by Obamacare. So by the time the ER room pours as half million in resources into saving a life, Medicare still gets to pick up the tab.

Your closing statement sums it up, "The costs are HUGE."

Thank you for your comments and take care.

Jim in San Marcos said...

Hi Frakrak

I think all the people with the gumption and grit to stand up to the mess in the US have moved to your country, Australia.

I don't think what we are looking at is socialism. It is the free ride that everyone is getting. The party isn't over.

There is a very good chance that we have destroyed the middle class. We just don't know it yet.

Uncertainty seems to be all that is real.

That 1% Levy on income for a Medicare tax sound awful low. What does that get you? A bottle of aspirin? The doctors don't ask you to "cough" over the phone for a physical, do they??

Take care.

Jim in San Marcos said...

Hi Tyrone

Your comments about "A chicken in every pot" makes me think of our neighbor down below us. He is raising chickens. This area is zoned residential.

I don't think you will see "In God we Trust," replaced. I have seen several retail signs saying "In God we trust, all others pay cash."

It could be a sign of the times.

Hard to say how it goes from here. It doesn't look good.

Take care

frakrak said...

Hi Jim, the Aussie gov spends about 110 Bn on health, the levy and surcharge are a small component on the funding ammount, mostly generated by the GST. Health is about 17% of the total government budget.

Another thing the two countries have in common, (total lack of political interest in policy)!
Meet a lot of expat Americans thru work, all great people, sorry for the rant !!

I am thinking more along the lines of the no frills examination via the web (the virtual examination!),then a gradual progression to outsourcing to a virtual call centre doctor in Shri Lanka!

Hope Obama does a better job for you all
cheers

Jeffrey said...

The level of ignorance here is surprising and not consistent with your usual blog. "Obamacare" mandates the purchase of PRIVATE insurance plans, using PRIVATE doctors in PRIVATE hospitals. There is no "government takeover" of healthcare nor any government agency getting between you and your doctor. Anybody suggesting otherwise has lied to you.

If you have an insurance policy you like now, Jim, just keep it. If not (because you have a pre-existing condition and therefore cannot get insurance) you will now be able to buy insurance. It will not be cheap nor will it be a "Cadillac" plan. But you will get a tax credit to help defray some of the cost and, if you are low income, outright subsidies to make it more affordable. But it will not be free. It will, however, be more than emergency room care, which is all we offer uninsured sick Americans. Incidentally, we are the ONLY developed country in the world that makes healthcare available only to employed or wealthy citizens. In every other developed country, each citizen is given basic care, regardless of age, health condition or income.

Contrast this with the current American system. If you are poor or have a pre-existing condition, you cannot pay for coverage so you go "bare". If you get sick, you go to the emergency room and taxpayers pay for your care at the highest cost, least efficient way. This is the system that is the most expensive in the world (15% of GDP) but yields results that are 37th in the world. You obviously prefer that system because you've got yourself a good plan. But if you ever lose your job before you are 65 and have any kind of medical issue, you will be on the "outside" of the system where a single illness can wipe out your entire life savings. And you will look at the taxes you have paid over your life and ask yourself "what the hell did I get for my money?"

In short, I have no problem paying taxes that give our citizens the security of knowing they will not be bankrupted and alone if they fall sick. As they say, there for the grace of God go I.

Rob in NS said...

Jeffrey

Right now over 40% of the Nova Scotian budget is spent on health care. I agree with you that one shouldn't be wiped out financially if you get sick. The problem here is they are projecting a 1.2-1.4 billion dollar deficit. This is in danger of becoming structural in nature. At some point the bond market is going to cut up our credit card. In the process of trying to help the less fortunate we have garanteed that down the road none of us here will have proper health care. The road to hell was indeed paved with good intentions. Until the system crashes here I suppose Canadians can look south and gloat at how much better off we are but the endgame for everyone is only the rich will be able to afford proper health care. Recently the Premier of neighbouring province of Newfoundland had to go to Florida to get a heart valve operation because he couldn't get it done at home. How would you like it if you had to fly to different country to get operation? The public private system Obama is trying to cram down will not work. It will just be the Canadian one in different clothes. The only difference being the politicians there will be flying to Philipines or India with ours.

Jeffrey said...

Rob:

Canada and the UK provide universal care with single payer systems, i.e., medicare for all. The Swiss and German model accomplish the same thing with a combination of insurance regulation and private care. (google "swiss healthcare" and "german healthcare" for details). I did not suggest that we adopt the Canadian or UK systems. Rather, I was pointing out that "Obamacare" is NOT the Canadian or UK system. As it keeps private care and private insurance in place, it is more like the German and Swiss model than anything else. So far, I haven't heard any stories about Germans or Swiss flying elsewhere for medical care, have you?

Jeffrey said...

Here's a useful article for understanding the Swiss model: http://www.nytimes.com/2009/10/01/health/policy/01swiss.html

They spend 11% of their GDP on healthcare and, from the article, patients appeared to be well-served. It is a regulated, private insurance system, i.e., "Obamacare". Oh, and per WHO health rankings, Switzerland is #20:

http://www.photius.com/rankings/healthranks.html

Interesting that France is #1. For a description of their system and its benefits, see this interesting article in Reason, which is generally a good source for free-market ideas (which, you may be surprised, I generally prefer):

http://reason.com/archives/2009/12/07/why-prefer-french-health-care

The point I have been trying to make is that the information and assumptions that appear here about Obamacare are simply misinformed. And I completely understand why. Most people are healthy and insured, which means that most people rarely experience the problems of the sick and uninsured. But that doesn't mean the problems aren't there, that they are not getting worse or that other countries appear to have found solutions for these problems. In fact, almost everybody agrees that our system is broken and needs repair.

As I see it, Obama gives a damn about the sick and uninsured. While I am sure that most conservatives are caring individuals, they did nothing to fix our broken system when they had the chance. Now that Obama has filled the vacuum and is proposing a fix that appears to work elsewhere, they are doing everything in their power to stop reform -- including lying about what the reform does and who pays for it.

Rob in NS said...

Jeffrey

The problem with all the health care systems is that they are unsustainable. Like I said before health care costs are increasing at 8% per annum. I'm not great at Math but all that needs to happen is costs double and a bit to overwhelm the finances of my province. The Law of 72 says that will happen sooner than people here want to admit. Medical Breakthroughs cost big bucks to implement. I make a little over 40 grand a year if I get sick now and it costs 3,000,000 dollars to fix me it might make sense to put me in shop for repairs. However if I'm seventy five and the best I can hope for is an additional two years of life then maybe it's time for me to punch the ticket. You can show me all sorts of health care systems it will not change that fact. Call it what you want death panels whatever the same thing is or is going to happen ewverywhere. Do you really think if I needed the operation that Danny Williams got Medicare would be flying me to Florida for treatment? Of course not I'd get the Chevrolet Heart valve and the Doctors would just cross their fingers and hope I don't blow a tire on way home. We have two tier medicine in this country just like you have. The French and Swiss can brag all they want but when you boil it down I suspect that it is the same there as well. This isn't a conservative versus liberal battle. Someone needs to sit down with public and come clean about what our options are regarding health care throwing more money at it won't work. We are all going to die and I really think it is unfair that we are making unborn generations pay for us not facing that reality.

frakrak said...

Rob you are so right with your comments about it not being an ideological debate, it has very little to do with government v’s the free market!!

It is all to do with America looking at other health care systems and getting it right the first time, and innovating from other countries experiences, has he done this (Obama)?

It is not about Obama’s drive to be the first president that brings in a comprehensive public health care system and his drive to get it done quickly because he may not get a second term!

Surprised to find that the U.S. already spends 17% on health as a ratio of GDP, there would be plenty of room there to reform! Obama is two steps ahead with his plans, Australia spends 9% of GDP on health, and it is a bloody mess, and we have a comprehensive public health system.

Wouldn’t this suggest you aren’t getting the most bang for your buck at the moment? Clear out the unrepresentative swill that is causing the problems in your system first, you may find that you can innovate, end up spending less as a percentage of GDP and have the best health care system in the world. I know Aussies will be knocking at your door, cap in hand for ideas.

Jeffery, I gotta feeling your proposed system is being based on the Australian model (in part at least), thanks to Hillary’s input. Our system is in crisis and is unsustainable, if you are copying our system, the U.S. can do better, don’t go down this road, you need to reform what you have first.
cheers

Jim in San Marcos said...

Hi Jeffrey

Thank you for your imput. I was writing an answer to you and I decideded to make it my blog post for tomorrow.

Stay tuned

Take care.