The Direct Cost of Obamacare

Leaving aside the legal question (“Does the federal government have the constitutional basis for absorbing the health care system?”) and the moral question (“Whose responsibility to care for one’s neighbor is it anyway?”) we come to the question of cost. The question we must ask is “Are the direct costs of health care reform legislation being accurately portrayed by its supporters?”

We have been told by the President, et al that the bill(s) currently being discussed will cost only $940 billion over ten years. That is not an inconsiderable amount of money. But it would seem that the figure is wrong:

The CBO projects that over the next four years, less than two percent of the bill’s alleged “ten year” costs would hit:  just $17 billion of the $940 billion in costs that the Democrats are claiming.  In fact, the costs through President Obama’s entire presidency, should he be reelected, would be $336 billion.  What would the president leave behind for his successor?  According to the CBO, he would leave behind costs of $837 billion during his successor’s first term alone.  If his successor were to serve a second term, he or she would inherit a cool $2.0 trillion in Obamacare costs — about six times its costs during Obama’s own tenure.  This legislation is a ticking time-bomb.

To see the bill’s true first-decade costs, we need to start the clock when the costs would actually start in any meaningful way: in 2014.  The CBO says that Obamacare would cost $2.0 trillion in the bill’s real first decade (from 2014 to 2023) — and much more in the decades to come.

But $2.0 trillion wouldn’t be the total ten-year costs.  Instead, that would merely be the “gross cost of coverage provisions.”  Based on earlier incarnations of the proposed overhaul, the total costs would be about a third higher (the exact number can’t be gleaned from the CBO’s analysis, which is only preliminary and is not a full scoring) — making the total price-tag between $2.5 and $3 trillion over the bill’s real first decade.

Do you know what $3 trillion dollars is? That is $10,000 per every person in the US over the first 10 years (assuming a population of 300 million). In other words, $1,000 per person per year. Of course, a good number of those people will not actually contribute any tax revenues, so they will need to be covered by those who do. That would be those of us who have jobs, making the per person cost for us a multiple of that 1K per year. “But,” you say “a thousand bucks a year for health care coverage is a bargain.” Right. Except this law will not provide “free” health care for everyone–the cost estimate is a measure of what it will cost the government (that is the taxpayers) directly. Most of us will still have all the costs we incur today, plus the additional taxes to make it work for everyone else.

Then, of course, one has to consider that no large (and most small) government programs has ever cost less than projected and that Medicare and Social Security have historically cost many times what was originally projected. Government programs have no incentive to come in on budget and every incentive to keep expanding to fill the open space of the known universe.

Bottom line? If the Senate and House (and the President) were honest about the bottom line, they would not be able to get this passed into law. Unfortunately, honesty on this issue seems to have gone the way of the dodo.