A Question of Priorities
As we speak, the Senate is toiling to cut the health care reform bill from $1.6 trillion to $1 trillion over 10 years. Health economist Uwe Reinhardt puts those numbers into context:
A price tag of $1.6 trillion seems immense if one contemplates the figure in the abstract. It is, however, only about 4 percent of the total cumulative health spending of $40 trillion, the amount government actuaries now project for the decade from 2010 to 2020. That is also less than the 6 to 7 percent that total national health spending has increased each year in the past decade.
And $1.6 trillion is only about 1 percent of the amount of G.D.P. that America can reasonably be expected to produce in the next decade (about $150 trillion to $170 trillion).
That 1 percent would not be lost to G.D.P., of course, because health spending is part of G.D.P. Rather, it would be a diversion of G.D.P. — away from other uses, and toward providing the otherwise uninsured with the peace of mind that comes with health insurance and access to timely health care. It would represent merely a change in the composition of G.D.P.
That last is an important point. The president has declared that health reform will be paid-for. The relevant committee chairmen have agreed. This isn't a question between borrowing $1 trillion or $1.6 trillion. It's a question of spending priorities. The president, for instance, has proposed limiting the itemized deduction rate to 28 percent for taxpayers making more than $250,000 (the rate for most of us is between 10 and 15 percent). This would raise more than $300 billion over 10 years.
But the Senate has been unimpressed by the proposal. A world, however, in which we cut coverage to bring costs under $1 trillion but leave the itemized deduction, is a world in which we have explicitly decided that we would prefer to spend that $300 billion helping wealthy Americans lower their tax bills rather than helping low-income Americans afford health insurance.
June 26, 2009; 10:31 AM ET
Categories: Health Economics
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