THE PROGNOSIS FOR NATIONALHEALTH INSURANCE
All sides o the current health care debate acknowledge thatAmerican health care can be improved. But current propos-als based on President Obama’s policies would:worsen the system;•drive costs up;•increase health care cost infation more than doing•nothing;add more than $285 billion to the decit over the next•10 years; andstill leave more than 30 million people uninsured.•According to a recent
CNN
poll:Most Americans like their current health care coverage•but are not happy with the overall cost o care.More than 80 percent say they’re satised with the qual-•ity o care they receive.
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Reorms thereore need to ocus on costs and not break theparts o the system that currently work.
WHY COSTS ARE SO HIGH
Fity years ago, almost $5 o every $10 spent on health carewas paid through patient out o pocket expenses. Since then,total out o pocket expenditures have plummeted—today,only about $1 o every $10 is unded by individual patientsthrough out-o-pocket expenses.
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“Health care reorms based on President Obama’s criteria ailto address the undamental driver o health care costs—thehealth care wedge. The likely impact rom the combinationo generous ederal subsidies and a new public insuranceoption is a signicant reduction in people’s incentives tomonitor costs and a signicant increase in the costs o ad-ministering the public program. The growing health expen-diture is strongly correlated with infation in medical costs.Reorms based on President Obama’s priorities can thus beexpected to weaken the health care system and increasemedical price infation.”
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“Waste, raud, and abuse created a large health care bill o $700 billion in 2007. On a per capita basis, $700 billion inwaste, raud, and abuse imposes a bill o over $2,300 per le-gal resident in the U.S. The possibility that 30 percent o totalhealth care spending is waste underscores the President’scontention that reorm is needed.”
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EXPECTED COSTS AND ECONOMIC IMPACTS OFCURRENT PROPOSALS
According to the non-partisan Congressional Budget O-ce (CBO), the present value o the total additional ederalspending that would occur based on the President’s healthcare reorms would be $1.2 trillion or $3,900 or every man,woman and child in the country.
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Assuming that the proposed plan would provide an addi-tional $1 trillion in ederal subsidies over 10 years and oerincentives to move current Medicaid recipients into a newederal health insurance program, the program would:increase national health care expenditures by an addi-•tional 8.9 percent by 2019;increase medical price infation by 5.2 percent above•what it would have been otherwise due to the highernational expenditures by 2019;pressure the ederal and state budgets due to the in-•creased expenditure levels and increased medicalinfation:the current net present value o unding health care•reorm based on President Obama’s priorities wouldbe $1.3 trillion, or $4,354 or every man, woman, andchild in the U.S. These gures include:a net present value o all additional ederal gov-•ernment expenditures through 2019 o $1.2 tril-lion, or $3,900 per capita; and
www.laferhealthcarereport.org
Key Facts rom “The Prognosis or National Health Insurance” Prepared by Dr. Arthur B. Lafer
August 2009
continued on back
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