By Lambert Strether of Corrente.
The central claim of single payer advocates in the health care battle that culminated in
RomneyCare ObamaCare was that the country would save a ginormous amount of money, enough to cover all the uninsured with actual, delivered health care, with no dimunition of service and while actually bending the cost curve down. In 2009, via hipparchia, that ginormous amount was around $359 billion:
[Steffie Woolhandler and David Himmelstein of PNHP] found, in a study published in 2003, that the US spends about 31% of its health care dollars on administration and Canada spends about 16.7% of their health care dollars on administration [this is all administration, not just that attributable to insurance administration]. Which means that we are spending 14.3% of our health care dollars on what is probably useless administration, and they feel that this is a low estimate. Fine-tuning the estimate a little bit yields a difference of about 15.6%.
Since most of Canada’s health care financing is publicly administered and only some of our health care financing is publicly administered [Medicare, Medicaid, etc] and a goodly portion is privately administered [by parasites], they attribute this extra 15+% to the
blood-sucking leecheshealth insurance industry.
So, now we can do a little simple arithmetic. In 2007, our total national health expenditure was estimated to be $2.24 trillion; 15.6% of that would be $349 billion [that’s close enough to $350 billion for me]. The forecast NHE for 2009 is roughly $2.5-2.6 trillion; 15.6% of that would be $390-405 billion, which is why you’ll sometimes see people, Bernie Sanders for one, saying we could save $400 billion if we just dump the private insurance companies.
Updating this to the present day, using similar reasoning:
Upgrading the nation’s Medicare program and expanding it to cover people of all ages would yield more than a half-trillion dollars in efficiency savings in its first year of operation, enough to pay for high-quality, comprehensive health benefits for all residents of the United States at a lower cost to most individuals, families and businesses.
That’s the chief finding of a new fiscal study by Gerald Friedman, a professor of economics at the University of Massachusetts, Amherst. There would even be money left over to help pay down the national debt, he said.
Assuming paying down the national debt to be important, which it may, or may not be, given the state of the real economy. (More below on that.)
Friedman says his analysis shows that a nonprofit single-payer system based on the principles of the Expanded and Improved Medicare for All Act, H.R. 676, introduced by Rep. John Conyers Jr., D-Mich., and co-sponsored by 45 other lawmakers, would save an estimated $592 billion in 2014. That would be more than enough to cover all 44 million people the government estimates will be uninsured in that year and to upgrade benefits for everyone else.
“No other plan can achieve this magnitude of savings on health care,” Friedman said.
So, $359 billion in 2009, $500 billion in 2013, either way, you’re talking real money (and, more importantly, massive misallocation of resources in the real economy). Unfortunately, the CBO scoring models used in the ObamaCare debates only measured government revenues and spending; they did not measure benefits, society-wide, to the American people as a whole. Therefore, single payer’s ginormous savings were taken “off the table” throughout the debate, a priori. It’s as if — assuming here that government is like a household, which it isn’t — the head of the household refuses to lay out one dollar of the ten they have in their wallet, because they’d end up with nine, even though the family, as a whole, might gain a thousand dollars if that one dollar were spent. As Bloomberg explained at the time:
In his post, the [CBO’s] 47-year-old [Douglas] Elmendorf is the official scorekeeper on Capitol Hill for the cost of health-care proposals.
Elmendorf’s agency provides the final word on the price of a government insurance plan, the savings from fighting obesity and whether a bill fulfills Obama’s pledge to expand health-care coverage and cut costs without raising the budget deficit.
With a federal budget deficit the administration projects at $1.8 trillion this year, paying for broader health coverage is central to a bill’s prospects. Budget rules require lawmakers to use the nonpartisan CBO’s cost estimates unless Congress takes extraordinary steps — such as a supermajority Senate vote — to ignore them.
So, “not increase the deficit” is that dollar bill the Bad Dad keeps in his wallet, even though spending it would win his whole family $359 (or $500) billion. What would have been needed — rather, what would have been done, had the Democratic effort on health care “reform” had a shred of intellectual honesty, heck, common human decency — would have been not CBO scoring, but a full analytical study. Health care regular SteveB at Daily Kos in 2009 (cleaned up just a touch):
“Scoring” is a narrow and limited process that deals only with bills that are moving through the congressional process and only looks at Federal cost, which would show a tax increase for single payer, but ignores savings for total U.S. and all other stakeholders.
The CBO study we desire should have been requested back in January before the congressional process became locked in on particular legislative approaches.
Missed opportunity, to say the least. And not merely by career “progressives” too bsuy running interference for Obama, but by legislators with single payer bills they’d actually introduced; Conyers (HR 676) and Sanders (S703).
It’s very important to use the correct language. We want an “analytic study” and we do not want just “scoring.’ Do not use the word scoring. Scoring only looks at the federal budget piece, which of course goes up under single payer. Only an “analytic study” can look at the total costs, and costs to different sectors (federal, state, local, individual tax, individual premium, individual out-pocket, employer, etc.).
The ask should be:
“There ought to be a complete, honest, side-by-side comparison of all proposals, including single payer, as a complete analytic study by the Congressional Budget Office &/or the Geneal Accounting Office. [T]he side-by-side comparison should include not only the Federal government costs, but also the projected total U.S. cost and the costs to other stakeholders including state and local governments, employers and to individual, families and households of different income levels.”
Still true today! (The author provides a “model study” by the Commonwealth Fund.)
Chris Hayes, bless his heart, got the politics right back in 2009:
[C]onverting a moral and political argument into a technical and accounting one ends up ceding veto power to the accountants at the Congressional Budget Office. In a Beltway version of Revenge of the Nerds, every time a Democratic bill comes out of committee it’s sent to the CBO to be “scored”–that is, to evaluate how much it will cost and how much it will “bend the curve” on future costs.
That’s the “permission slip” part.
So far, the results have been mixed. CBO head Doug Elmendorf has been skeptical about the gains to be had from measures like health IT and wellness programs, and both the House and Senate [ObamaCare] bills have been scored as revenue neutral over the next ten years. In another context that would be great news, but since healthcare is being sold as a way to reduce the deficit, revenue neutral doesn’t quite cut it.
And Hayes got the semantics part right, too:
The other problem is broader than just these pieces of legislation. Obama has inherited a shared political vocabulary in Washington (with phrases like “fiscal discipline,” which he himself employs) that shapes the contours of the possible and semantically militates against progressive politics at every invocation. If “fiscal discipline” meant that politicians support tax increases on the wealthy or cuts to the military budget to pay for programs, it would be a useful concept. But what “fiscal discipline” means in Washington is cutting government. It means no taxing and no spending. It means “pain” and “sacrifice” and gutting the welfare state. When politicians say they’re “fiscally conservative,” what it actually means is they’re conservative. Full stop.
Today, in 2015, we understand the politics, the semantics, and — thanks to MMT — the economics. From Joe Guinan of Renewal:
The notion of a revenue-constrained government budget in a monetarily sovereign state may be a useful fiction for conservatives and rentier capitalists, but it should not have gone unchallenged by the left. As a result, any proposal for investing in social provision, or even in efforts to prevent climate change-driven civilisational collapse, runs immediately into the killer question: ‘How are you going to pay for it?’ (Mosler, 2010, 13).
As we have just seen in the policy-making debacle of ObamaCare, the Democratic answer to that question, fully compliant with that “useful fiction,” shamefully lost and is losing thousands of lives. A killer question indeed!
So, if you want to make decisions from the standpoint of — to strike a blow at random, here — “provid[ing] for the general welfare of the United States” (U.S. Constitution, Article I, Section 8), demanding “revenue neutrality” as determined by CBO scoring would clearly be insane. So the Republicans aren’t all that nutty to insist on dynamic scoring, which at least attempts to take their whacky views of “the general welfare” into account. It’s only that their ludicrously tendentious methodology — the faith-based Laffer Curve — gives the impression of right-bending ideological rigidity so acute that only the political equivalent of an orthopedic appliance could cure it. If only a better methodology were available!