In the United States, government at its various levels now accounts for roughly 45% of health care spending. (And by “now”, I mean 2004, the latest year for which OECD data are available. In 2004, of course, the government provided little prescription drug coverage. Remember that fact; it will become important later.) The United States spends about 15.3% of total GDP on healthcare. That means, for those following along at home, that government spending on health care consumes about 7.7% of GDP.
Canada spends 9.9% of GDP on healthcare. France spends 10.5% of GDP. What is the magic route by which we are going to cover all the people not currently covered by government insurance for 2.2-2.8% of GDP?
There are two problems with her argument: the numbers do add up, and she’s shifting the goalposts. Before I get to those problems, I would point out that 45% of 15.3% is about 6.9% GDP, not 7.7%. While that might seem like a picky detail, to paraphrase Senator Everett Dirksen, a point of GDP here, and a point of GDP there, and it starts to add up to real money. (And as I’ll point out, it does matter). Fortunately, one of her commentors responded:
“What is the magic route by which we are going to cover all the people not currently covered by government insurance for 2.2-2.8% of GDP?”
No magic is needed. The 7.7% the government spends is almost all on the elderly. The rest of the population is very cheap to care for.
Medicare and the portion of medicaid spent on the elderly come out to about 5.8% of GDP. The rest of medicaid costs about $1800/yr for each person. For 200 million people not currently covered by the government, that’s about 3.0% of GDP. That brings us to 10.7% of GDP for the whole country. (5.8% for seniors, 1.9% current non-senior medicaid, 3.0% the rest). Administrative savings for the bulk of providers who no longer need to retain any capacity for dealing with private insurers, who could be pressured to pass those savings on to the government, might even get it down to 10.5%.
Regarding the economics of infectious disease (something I track professionally), this sounds about right. Two-thirds of infectious disease expenditures occur through the Medicare system, and Medicare also picks up some costs for sick middle-aged patients (as noted below, Medicare also supports those who qualify for Social Security due to debilitating illness). But Galt doesn’t buy it:
Mmmmm . . . try again. The rest of Medicaid is spent on an unusually healthy population: young women and small children. It isn’t treating any of the expensive ailments of middle age, from diabetes to cancer.
The commenter responds:
You don’t know much about medicaid.
It covers natural parents, but also foster parents and many adoptive parents who are not so young. It covers any household with less than $2000 in assets (though those have restricted benefits). It also covers 9 million people eligible for SSI who have life-long chronic, dibilitating conditions, which alone skews the covered population to “less healthy” than the rest of the non-senior population. It isn’t just young mothers and children.
“Then there are the 40 million uninsured you’ve promised to care for . . . “
They are included in my calculation. They also include some of the cheapest elements in society to insure. Many are uninsured by choice. Those are healthy, young people with no prospects of pregnancy. While they may like insurance, they opt out by choice, not need.
BTW, the government does pay almost 1% of GDP for prescription medicine.
Then there’s the shifting the goalposts ploy. Galt implies that healthcare reform would be a failure if the non-elderly component is greater than 2.8% GDP. That is a ludicrous way to define the problem. I would argue that any healthcare system that provided decent universal coverage at or less than the 15.3% GDP we currently spend would be a vast improvement. Why?
Because the primary goal is to provide everyone with decent healthcare.
Conservatives seem to forget that–or, in fact, don’t think that’s a good thing.
Any additional savings (and as discussed above, I think there would be considerable savings) are a bonus. If we ‘only’ decreased spending by 2% GDP to 13% GDP, instead of spending 15.3% GDP, and provided healthcare to every American, how is that a bad thing?
Related post: Kevin Drum says something similar.