Healthcare Math

It is a mystery to me why the GOP continues to deride the Affordable Care Act (Obamacare) and not offer some alternative combining the same benefits but in some more attractive piece of legislation.  Is the GOP effort to repeal or defund Obamacare based upon supposed defects in how the law generates benefits (like taxes or personal requirements), or is their disgust based upon the benefits themselves?

There are plenty of progressives who would argue ACA simply does not go far enough and does not deal substantially enough with cost.  These liberals would toss Obamacare in a heartbeat if they could replace it with a European style “universal healthcare model”.  But, what are the GOP’s ideas?

Consider that the US healthcare delivery system accounts for about $3 trillion in annual expenditures ($2.6 trillion in 2010).  With a population of about 320 million, that represents about $9,000 per person per year.  In other words, a family of four represent $36,000 in annual healthcare cost.

You may be quick to say you do not come close to spending $9,000 or $36,000 if you are part of a family of four.

Take a breath.  This is just math.  But if you stop and think about years when you are likely consume more medical services (like pregnancies, chronic diseases, or when you grow older), you can see that medical costs can mount up.  Some estimates for knee replacements ring in at about $ 70,000.

And even if you are a lucky person and are healthy, someone else is spending to make up your lower than average healthcare consumption.  Who is paying these huge amounts if you are not?

It would appear that American businesses and tax payers are carrying most of the healthcare cost load.  Most Americans obtain their coverage through their employer, and once they reach the age of 65, receive tax payer provided Medicare coverage.  Each of us may pay some amount through co-pays and deductibles and the Federal Government supplements tax payer contributions (for Medicare and Medicaid) with sizable borrowings (read increases to the national debt).  When the dust settles, the US in total has spent $3 trillion, about twice as much as Germany or France, both of which provide better health outcomes for all residents.

An Hypothetical Republican Plan

Check one.  The GOP embraces (   ) healthcare for all Americans, or (   ) as much healthcare for all Americans as they can afford.

If the GOP truly cared about American healthcare (box one), they might come forward with an ACA alternative.  They might begin by pointing out the complicated nature of Obamacare and its many taxes and complicated compliance rules.  They might also underscore the burden US business, especially small businesses inherit having to provide healthcare insurance policies.  Why not free businesses from this responsibility?

The GOP could go on to say there was no way someone (or a family) earning the minimum wage ($15050 per year) could ever afford their mathematical share of healthcare annual cost.  It should be expected that such a family would decline insurance coverage or take a policy with minimal coverage due to its cost.  The children of this family would grow up seeking emergency room care, and should there be chronic illnesses, they would be out of luck.

The GOP would point out that emergency room coverage was actually an expensive hidden tax on everyone else.  The rest of us were paying and the uninsured was receiving substandard healthcare.  The GOP reasoned that if all Americans were paying anyways, why not provide good quality care?

The GOP would point out that Medicare and Medicaid were two under funded healthcare programs where again the rest of us are responsible for the difference.  Why not roll Medicare and Medicaid into the fix for ACA?

The GOP would say firmly though that this healthcare alternative is not free and must be paid for in some manner.  They would propose a combination of wage taxes (like now), coupled with some modest co-pays or deductibles (just enough to curb waste), and a new flat tax (for example a national sales tax).  In one fell swoop the GOP could eliminate three programs they detest and replace them with an elegant alternative.

The  best part of the GOP proposal would be that if they implemented a plan like Germany’s or France’s, it would be possible to eventual cut overall per capita healthcare costs in half with even better outcomes than experienced today.  Hmmm.

If the GOP checked the second box, one would think they only favored ri….   Hmmm.

How could anyone object to the benefits outlined in the GOP first plan?

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2 Comments on “Healthcare Math”

  1. List of X Says:

    Easy – the rich would object to the first plan because they may end up paying more in taxes. So there is no way GOP would support health care for all Americans, even with GOP’s supposed adherence to Christian morals.

    • X, you may be correct but I don’t think the reasoning will be higher taxes… with a flat consumption tax, the very rich would probably pay less… Here’s why… Marginal rates are being driven higher by the slower economy and the constant deficit (which in turn is being driven by Medicare and Medicaid)…

      My guess is that logic would lead the GOP to champion this approach but the dirty game of politics would drive them to keep status quo… maybe even the ACA, and have something to complain about…

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