Obama Composite National Healthcare Plan: Net Cost Decrease for Avg. Family

Critics have sought to characterize President-elect Obama’s healthcare proposal as “socialized medicine”, despite its relying almost entirely on market dynamics and the private sector. Government spending is considered to be one area where Obama’s plan could be unacceptable to fiscal conservatives, though Obama’s pragmatist fiscal policy is largely in line with conservative fiscal policy and aims to cover new spending with spending cuts elsewhere. New analysis suggests there is already money to cover his plan and to reach near universal coverage with a few workable adjustments in current legislation.

Analysts suggest that Obama’s stated first priority, making sure all American children have access to healthcare —mainly through the SCHIP program, where states use federal funding to provide coverage to uninsured children—, would cost between $6 billion and $9 billion. His plan to help small businesses cover their employees —a step toward universal coverage under the private sector healthcare system— is estimated to cost another $6 billion per year, the combined total costing less than one month of the Iraq war as currently funded.

Another $10 billion would be needed to advance new IT solutions to make medical treatment more efficient and reliable. The total estimated cost, according to CNN and its team of analysts, would be between $52 and $106 billion per year. While some critics say this is a monumental amount of “new spending”, just four months of Iraq war deployment (one-third of the total annual cost) would cover the plan’s budget, which is dwarfed by the $2.26 trillion total US spending on healthcare, per year. That $2.26 trillion amounts to over 15% OF GDP, a level economists say the US can ill afford to see move higher.

Obama’s plan would be designed to close gaps in the private-sector healthcare system, thereby saving the viability of the system’s business interests, over the long term, by making the healthcare market more sustainable. In terms of the value of federal budget dollars spent, the insurance giant AIG alone has been given first $80 billion, then another $43 billion, and is now going to see that money replaced with a larger $150 billion loan, in exchange for the government’s taking an 80% interest in the firm’s shares.

For one-third of the money “invested” in AIG over the last 3 months, some economists believe President-elect Obama’s healthcare policies could be fully funded, and the most serious drain on American consumers’ and businesses’ revenues could be stabilized. In the year 2004, the Henry J. Kaiser Family Foundation (KFF) concluded that the costs to the federal budget and to privately insured Americans of the 40 to 47 million uninsured reached $41 billion per year.

Those individuals would receive only about half the quality or extent of treatment available to patients with paid insurance policies or government coverage. In 2005, MSNBC reported that the average cost to an insured family or employer-paid plan was $922 in inflated premiums, as a result of costs incurred by covering the uninsured. Somehow, those bills need to be paid, and people cannot be denied treatment for serious illness, meaning that either the private sector—profit-driven insurance firms—or the public sector will spread the cost of covering the uninsured across the entire healthcare system.

An economic public service policy to spur private coverage would be more cost-effective than a system based on speculative insurance premium increases, and make private insurers more cost-competitive. Failing that, MSBNC’s projected that at least 11 states would see insurance costs attributable to the problem of the uninsured rise to more than $2,000 per family.

Though private interests often cite public spending as a tax-based drain on private investment, that $2,000 per year in extra premiums makes insurance industry costs more prohibitive and sclerotic and hits families hard in hard economic times. By contrast, a price-tag of $52 billion —KFF predicted in 2004 it would cost $48 billion to cover the uninsured— would amount to just $173 per American citizen or an average projected cost of $693 per family of four.

The net effect is a lower cost for the average American, a more effective and dynamic healthcare market, and a system where federal spending can be better directed and planned for, without so many unforeseen risk factors, as result from having nearly 50 million people with no established coverage.

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Originally published November 14, 2008, at CafeSentido.com

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