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You have to spend money to save money
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| Contributor | ArmyDem |
| Last Edited | ArmyDem Mar 21, 2009 11:47am |
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| Category | Blog Entry |
| News Date | Thursday, March 19, 2009 05:00:00 PM UTC0:0 |
| Description | A good summary of this Wonk Room post requires some poor grammar: We are less unable to afford reforming health care than not reforming health care.
I don't doubt the Lewin Group's estimate that universal health care could cost about $150 billion a year, or $1.5 trillion over 10 years. And resolved: No one wants to spend $1.5 trillion more dollars. But there's a spend money to save money dynamic here. If you don't do anything to reform the system and slow health care costs -- to "bend the curve," as the cool kids say -- you don't then save $1.5 trillion we were going to spend over 10 years, as some imply. Rather, spending growth continues unchecked. And in total, you end up spending much more.
The number you generally hear, and that Igor Volsky uses, is that within 10 years, spending increases by $2.6 trillion. That's not an apple-to-apples comparison. The $1.5 trillion number is spending over 10 years. The $2.6 trillion is spending in one year: 2020. If current trends continue, spending in that single year will be $2.6 trillion higher than spending this year. But you also have to add up the difference in 2010, 2011, 2012, 2013, 2014, 2015, and so on. You're looking at numbers approaching -- if not surpassing -- $10 trillion.
The Commonwealth Fund recently modeled the effects of a health reform plan very much like the plan Obama offered during the primaries (and almost exactly like the plan Clinton offered, and Baucus has proposed). They didn't find anything remarkable: The plan does not end spending growth. It does not attach it to the growth of GDP. The effect is modest: The projected spending increases of 6.7 percent a year fall slightly to 5.5 percent. You can see it modeled here:
But the cumulative impact is immense. |
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