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Health Care Math 1: Necessary Numbers

Innumeracy and math-phobia have many downsides. One is the failure even to ask the right questions. Here is a list of some important questions which are necessary to know the answers to in order to have an informed debate on health care.

This is the first in a series of related posts.

Whether one looks at the 2000 page Democratic plan or the 200 page Republican plan, costs must be analyzed.

 

Let’s pretend the CBO knows what it is doing. How could it go about making reasonable estimates about the cost of reform and how to pay that cost?  It could start by making simple lists of where expenditures must be raised, where they can be lowered, and where revenues can be increased.

 

Some of the numbers pertain to public expenditures and some to private ones. This distinction should be carefully delineated.

 

Here is an attempt at such a list without the numbers. The numbers to be filled in are annual numbers estimated actuarially or otherwise. Each line should be derived from a more detailed worksheet with explanations of why those estimates seem reasonable.

 

1)      Higher Costs:

 

a)      New mandates for all health insurance

b)      Insurance for the uninsured

c)      Total new costs (add lines a and b)

 

2)      Cost Savings

 

a)      Reduced or no profits

b)      Net lower administrative costs

c)      Savings from less fraud and abuse

d)      Lower prices from providers

e)      Reduced benefits (rationing), especially from Medicare

f)        Savings from more preventative care

g)      Total lower costs (add lines a through f)

 

3)      Higher Revenues

 

a)      Premiums from the newly insured

b)      Higher premiums from the insured

c)      Taxes or penalties from those who refuse insurance

d)      Taxes on private insurance

e)      State subsidies (higher taxes or borrowing)

f)        Federal subsidies (higher taxes or borrowing)

g)      Total higher revenues  (add lines a through f)

 

 

The rest is easy. Just add lines 2e and 3g and subtract line 1c. If they are not equal, adjust line 3f and pay for it with still other taxes or borrowing.

 

Don’t let anyone tell you that these calculations are just too hard for either Congressmen or ordinary taxpayers to understand. The numbers should be published and publicly debated. Anything less is a violation of the rights of a free people.

 

Attacking Sarah Palin, frustrated town hall attendees, and Fox News may be great sport, but passing unintelligible 2000 page bills with unknown rules and obscure costs built in, is hardly consistent with the oaths of office taken by Congress.

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