1. News & Issues
Kimberly Amadeo

Healthcare Reform Good for Economy

By September 21, 2009

Follow me on:

Without healthcare reform, Medicare and Medicaid costs will rise from 6% (current) to 15% of GDP by 2040. Obama's healthcare plan will reduce costs by 1.5% per year by negotiating lower prices and reducing other inefficiencies, according to the Council of Economic Advisors. Lower healthcare costs translate to $2,600 more per family in 2020 and $10,000 by 2030. It reduces the deficit by 3% of GDP by and 6% by 2040. This lowers unemployment .25% per year, creating 500,000 jobs.

Expanding insurance will reduce visits to the emergency room by the uninsured. This will save $100 billion, or .6% of GDP, per year. Government-sponsored health insurance will remove this burden from small businesses, allowing them to be more competitive and attract higher-skilled workers.

Share Your Opinion - Should Healthcare Be Reformed

What It Means to You

If you like your healthcare insurance, reform won't change it. If you don't, the government plan will probably mean lower health insurance costs. Here's what your premium would be:

  • $70 for an individual.
  • $140 for a couple.
  • $130 for a single-parent family.
  • $200 for all other families.

I don't know about you, but that's less than what I'm paying now.

Related Articles

Join me on | Follow me on


(Photo Credit: Tim Boyle /Getty Images)

Comments

September 27, 2009 at 4:29 pm
(1) madwesh says:

I would like to see the numbers first. Who is right, the Congress & the admin or the CBO?

I would have every reason to doubt the admin, especially after the cost came down from $1.6 trillion to $900 billion, with essentially no change in the plan. The Senate projects a $800 billion equivalent version.

Posting numbers on “lower Healthcare costs” is pretty presumptious given that we don’t have one bill yet in Congress that embodies the agreed objectives. And CBO doesn’t project the numbers you state. Passing Healthcare at the cost of creating brand new budget deficits is a robbing Peter to pay Paul type idea.

For a minute, lets analyze what budget deficits vis-a-vis Healthcare overhaul mean:

- Borrowing money to fund the large government thus installed and its needs. This commits future annual budgets to servicing this debt and healthcare funding (I don’t buy that premiums paid in by the insured to the Gov’t will sustain the Govt insurance plan, it will become another underfunded liability like Medicare).

Result of the borrowed money and the funding of the new Healthcare plan: There won’t be much of discretionary budget money left to spend as a reaction to an emergency like a Katrina or a violent outbreak of someting like Swine Flu. We will have to borrow that money from the outside again.

Other results:
- The interest rate for financial products utilized in the US is no longer set here as potentially 1/3rd of the US budget is controlled by profit seeking countries and corporation (read China). Thus over time the Fed itself cannot control the rates leading to the next security threat. Remember, all mortgages are tied to the Treasuries- Treasuries are considered to be the closest to risk free today. They won’t be considered risk free for too long and will affect every aspect of the economy – will look like a tax. The result of all this on the dollar will be devastating as its devaluing will result in heavy inflation locally in the US.

- Today 5 of 10 new drug discovery and introduction in the world happens in the US. Surely, with Government negotiating the drug prices, they will kill any investment in innovation in the US and the drug companies will start to move R&D overseas (This is something this admin might want to understand about how 6 million US manufacturing jobs went to China). GSK and Merck have already started looking to other countries to contract R&D which starts a viscious circle of jobs migrating overseas.

- CBO projects a $480 billion liability/shortfall on the “budget neutral” Healthcare overhaul. Where do we fund that from.

- About half the $2 trillon Healthcare is our Government, which by design will not be reduced. Majority of the “savings” will come from the other trillion. Thus a better managed trillion dollars will produce cost reductions. You may have seen that Gallup’s poll indicates that Government waste’s 50 cents of every dollar it manages. Thus if that is close to accurate, today, even before the Healthcare reform we are “wasting” $500 billion.

Simple math tells me:
$480 billion + overcommitment of US budgets to Healthcare + funding underfunded Gov’t insurance plans + Government waste and admin overheads > $ 1 trillion over the life of the new plan. That cost is, well above 1.5% healtcare cost reduction you state above annually.

Healthcare needs reforms, but it starts with the Gov’t getting out of the way, not increasing its share from 50% to 75%. It also begins with identifying the areas where the problems in the present system exists (you may know that a Hospital has 13 state and federal regulating authorities mandating rules and laws).

Because the tires are bad, we don’t send a fully operational Chevy Corvette to the junk yard.

November 23, 2009 at 5:01 pm
(2) Mitsuko says:

Although I’d love to spend the ripping apart your claims with actual, factual, data. This would be a huge waste of time. I already see you’ve made a decision and are eagerly accepting any arguement which supports your support of the health care bill. I will simply state, “You are wrong. 100%incorrect.” I will in the future deter from reading any of your “economic analysis”, I’d suggest others do the same.

Leave a Comment


Line and paragraph breaks are automatic. Some HTML allowed: <a href="" title="">, <b>, <i>, <strike>

©2014 About.com. All rights reserved.