Home General Get the facts on Health Care Spending.

Get the facts on Health Care Spending.


Americans spend something like $2.4 trillion dollars a year on health care. We spend about 17% of GDP on health care, twice as much as we spend on food. If you run that out for about ten years,  with increases in costs of living, etc., you come up with a total of about $33 trillion dollars.

The CBO, Congressional Budget Office, just came up with a figure of $1.6 trillion as a cost over the next ten years for a universal health care option…or at least one that covered more people. Even if that were true, which it is not, it would come to an increase of 4.5 to 5%, which, over ten years is not bad. Less, certainly than if we did nothing.  Certainly private health care would drive it up dramatically higher. But if we had the CBOs estimated $160 billion a year more,  even that amount would be spread across all the population, roughly 60 to 80 million taxpayers, so it would actually be less for the individual.

The Senate Republicans ranted and raved about it, trying to tell the voters (that’s what you are to them;you’re a “voter” not a person) that it was too expensive. Well, it turns out that it is. It was based, NOT on a PUBLIC option, but something called “state-based exchanges.” These are basically pools of risk by the existing private health care providers. So, the idea is that you take some of my bad risks and I take some of your bad risks. That way all the health care insurers will have less risk. We won’t get hurt, lose money. What’s wrong with this picture? It’s nothing new.

The CBO basically rated the same system we have now with a few more people tossed into the mix! No wonder they only added 16 million people and left another 30 million-plus uninsured. It is the same old gang doing the same old thing. In fact, if you read the plan that the CBO evaluated, with it’s multi-level, for-profit options, it reads like something that would be left on your doorstep by an aluminum siding or carpet and flooring company. It is not a bad plan. It is a disgraceful plan. It is a comic book pretending to be a government document.

The studies done by McKinsey and by the Levin group all point to the fact that we can have a private health insurance segment and a public option and actually save money. In McKinsey’s case they estimate that we now spend about $650 billion more than a comparable country in the OECD spends simply because of our delivery system.  If a worker decides to join a public plan from a private plan, the employer is relieved of that cost but instead pays the government 6%  as an employment health care tax. The employer can also opt not to pay health care at all and simply pay 6% directly to the government.

Everyone will have to buy insurance and some people will be subsidized but the ones who have little money will be put on the government plan. The government plan will include Medicare, Medicaid, Tri Care, Schips and other miscellaneous plans now offered by the government. In addition, anyone whose employer does not offer health care insurance will be eligible for the government plan. So the government plan will be basically an expanded Medicare. And when people tell you that Medicare is in trouble, they’re right. The costs that Medicare and private care both have to pay are much inflated. Medicare and Medicaid are in trouble because we pay too much for medicine using a private, for-profit system.

The United States does far less well that our contemporaries in OECD, the Organization for Economic Cooperation and Development. In this case we are talking about these specific countries: Australia, Canada, Czechoslovakia, Denmark, Finland, Frances, Germany, Iceland, Poland, Portugal, South Korea, Spain and Switzerland. Most of the poeple in those countries live longer than we do by about 2 to 3 years.

Between 2003 and 2006, costs in this country went up by $650 billion more than expected. In other words, for a country with our gross domestic product, income per capita, we should have spent $650 million less to be in line with the top end of this group of nations. We spent $650 million more than the best health care system of the most affluent of those countries. Of that amount, $438 billion was for outpatient spending. In other words, two-thirds of increases in hospital care were either for emergency room care or for an increase in outpatient procedures in clinics. Not merely the indigent, but policy.

For example, about 90% of hernia operations in the U.S. are conducted as outpatient procedures. But in Great Britain, only 40% are done as outpatient procedures. One would think that outpatient surgery would bring costs down, but it does not. Because of the way hospitals in the United States bill patients under the private system, outpatient surgery was actually more profitable and increased because of the profit incentive.

Prescription drugs are 50% more expensive in the U.S. than in OECD countries and brand name drugs are 77% more expensive. Because of the way prescription drugs are used in this country, the way combinations of drugs are used, the expenditure actually amounts to 120% more in the U.S. than in OECD countries.

All aspects of American Health care are not bad. Our cancer outcomes beat the OECD, primarily because we have instituted in those areas most critical to cancer prevention much legislation that is preventative. For example, people can not smoke in virtually any public building in the United States. The OECD countries are much more permissive. The top five U. S. hospitals spend more on clinical trials annually than all the hospitals in any individual OECD country.

The fact is that once we have a public option, our health care costs will begin to come down. We can’t have any wording in the legislation that says the government program has to “compete on a level playing field” with the private sector. That is what the CEOs of the health insurance companies would like to ship out on their gravy train, but it cannot be allowed to happen.

Private plans must compete with the public plan if we are going to reduce costs. We know that by establishing a single-payer plan, we can cut costs by as much as 20%. That is guaranteed. We know it from actual situations in not only government run programs that cost as little as 4 to 6 percent to administer, but also in numerous non-profits where delivery is among the top five in the country, yet among the lowest cost.

We know how to do this. There is no confusion. Any confusion that may exist comes from the Right Wing of the Republican Party. The Neocons are trying to protect their fiscal supporters, the big health care companies. As a citizen, perhaps one without health care, your costs to have health insurance under a public plan will be less and you will be guaranteed good health care. Remember this. If health care costs did go up as a result of universal health care, they would not go up for the same population but for an additional 60 to 80 million people on this new plan. All those people will be paying into a health care system. If, on the other hand, health care costs go up only in the amount of the cost of living but otherwise stay the same, then you will actually pay less for your health care over time. Remember, the goal is to realize savings from a eliminating a long list of inefficiencies in the private health care system which are simply billed to you. The federal government will introduce savings in such areas as negotiated drug prices and many different kinds of procedures.

Let’s go to the bottom line, and to a total fall-back position. Let us suppose, that for some reason the people backing the private health care industry, which now takes an average of more than $6,800 dollars, per person, from you for health care…let’s suppose that they–the Neocon Republicans–are right. Let us suppose that they have no axe to grind, are not taking huge amounts of money from the health care industry in campaign contributions and are not doing everything that they can to prevent the introduction of a public plan, which, let’s face it, will be so popular that it does have the potential to wipe out the private sector in a few short years.

Even if they are not biased at all and the cost is the $100 billion increase per year that they claim it will be, then here is how you pay for it. Eventually you find many different ways. But for now, to get it started, you take $50 billion from the Defense budget. They would never miss it. They can spend $550 billion just as easily as they can spend $600 billion. If that is the difference between safety and danger, I’ll take danger–and a new military. Second, we retire the tax cuts for the top 1%. Those tax cuts themselves came to $1.2 trillion. So we could use some of those retired tax cuts for health care and still have much left over to put against the deficit, against the money we needed for TARP, and for the other spending we needed to keep us out of a Depression. Third, we make everyone take health care and even if we find interesting taxes to use to pay for it, as some ingenius Canadian provinces have, we make everyone who can afford it pay a premium.

You need to contact your government representative and tell him or her that you want a public option added this year to give all Americans the right to stay healthy or recover from a major illness without being mortally wounded by a financial catastrophe.

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