by Mike

So far we have heard much to do about the expensive nature of the Democratic proposed heath care bill (aka HR 3200 or America’s Affordable Health Choices Act of 2009) and its problems. Well now, it is time to dig into the numbers behind those costs and the potential problems is could pose.

Unbeknown to most Americans one of the key features of this proposal is expansion of that dirty eight letter word, Medicare. Americans know this system is broke, but do they actually know how bad is the question? Here are numbers on the Medicaid system as provided by Office of the Actuary, Center for Medicaid and Medicare Services, Department of Health and Human Services. This is before the proposed expansion of the present system.

According to the Actuary’s financial report which was produced in 2007, Federal and State Medicaid expenditures over a 10 year period are expected to increase at an astounding 7.9% per year, outlays in 2007 were $333.2 billion (Federal and State) and are expected to rise to $673.7 billion (Federal and State) by 2017. Enrollment is expected to rise from 50.1 million in 2008 to 55.1 million in 2017 or an annual increase of 1.2%. As of 2007, $6,664 were spent on on each enrollee, in 2017 this will increase to $12,227/enrollee.

Wonder why the States have been making such a case about Medicaid spending? Here are the projections of Federal versus State share of Medicaid spending pre-expansion of HR 3200.

A CBO analysis, released in March of this year, confirms the CMMS projections and are worse. The CBO Medicaid Baseline shows that from 2009 the expected number of Medicaid recipients will rise from an average monthly enrollment of 54.9 million to 59 million in 2017 and goes as high as 60.8 million enrollees in 2019.

Just the Federal Medicaid expenditures will increase from $255.4 billion in 2009 to $370 billion in 2017 and increase even further to $426.1 billion in 2019. (It is important to remember this estimate does not include state expenditures or the expansion of the Medicaid system through HR 3200.) Including state expenditures on Medicaid, total amount of spending would be around $1.8 trillion over a ten year period (2009-2019).

According to the CBO analysis of the America’s Affordable Health Choices Act, 11 million additional persons will be added to the Medicaid rolls. (Page 17 of 18) This will cause an additional $438 billion dollars to be added to “just” the Federal expenditures for Medicaid over a 10 year period (Page 18 of 18). Minus the inclusion of state expenditures, as a result of HR 3200, on Medicaid you are looking at $2.2 trillion over a ten year period just on Medicaid alone.

Taking into account the average percentage of state expenditures (About 40% to the 60% provided by the Federal government.) required from the additional spending of HR 3200, the existing spending both Federal and State pre health care bill, and the additional costs of Federal spending as a result of the health care bill, total spending on Medicaid “ALONE” could be as high $2.4 trillion over a 10 year period.

This is an additional $240 billion in Medicaid expenditures added to government spending on health care per year.

A counter argument might be that HR 3200 will allow those already on Medicaid to shift to the public insurance option, aka Government sponsored health insurance. Think again. From the CBO. (Page 9 of 18)

In sum, because of the specific features of the proposal, the number of people who might leave private coverage for Medicaid would be relatively small, and the number of people who would newly enroll in Medicaid would be relatively large—so together, those features of the proposal would reduce the expected rate of crowd-out.

Not one mention about reduction in the number of people currently enrolled in Medicaid, just an increase to its rolls.

From the CBO study of July 17th on the deficit effects of HR 3200, AMERICA’S AFFORDABLE HEALTH CHOICES ACT OF 2009.

(The total spending of $1 trillion over a ten year period does include the $438 billion for Medicaid already covered.)

The deficit from this bill as can bee seen is $239 billion over a ten year period. Ironically though this savings is a result of taxes and some reforms to Medicare, not Medicaid.

According to CBO’s and JCT’s assessment, enacting H.R. 3200 would result in a net increase in the federal budget deficit of $239 billion over the 2010-2019 period. That estimate reflects a projected 10-year cost of the bill’s insurance coverage provisions of $1,042 billion, partly offset by net spending changes that CBO estimates would save $219 billion over the same period, and by revenue provisions that JCT estimates would increase federal revenues by about $583 billion over those 10 years.

Adding up all of the numbers presented here,that is Medicaid spending and the proposed health care reform bill, we are looking at a net increase of approximately $3.4 $2.9 trillion over a ten year period, or $340 $290 billion per year (These numbers were altered due to the fact that the $438 billion in spending from HR 3200 was considered in the calculation twice.), for “reforming” health care. How this translates to yearly deficits is unknown. Seemingly, no data has been compiled on on this topic.

Conclusion: Already a trend for exaggerating or undercutting numbers and only being able to identify peripheral problems with health care, not critical ones, is easily perceptible. Still, it is still beyond my reason as to why Democrats in the House would be expanding a program like Medicaid that is undeniably broken and headed for disaster.

While there are minimal savings, when realistically cost adjusted for the amount of outlays, the amount is nearly a zero sum. Obviously to a sound mind, the expensive nature of this proposed program will result in an increase of taxes on the federal and state levels for most, if not all, income quintiles, not just the top 2-5% of earners. Remember, nothing is free as much as you and I would love to believe it.

All things considered, the questions still remain, “How is this “reform, “cost-control,” and are our legislators this naieve and inept?” “Or are they just this power hungry?”

Please note: I am not a health care or statistical analysis expert, but I can read, write, add, subtract, and sometimes multiply and divide. All of the results here are from statistical information obtained from official government sources, except for one. If you have any qualms or concerns please post a question in the comment box and we will answer them as best we can. Thank you, and as always I hope this was helpful.