Washington Post blogger Ezra Klein
writes:
[T]his idea that the health-care bill affects "16% of GDP" is
inane. That 16% of GDP captures people in private insurance,
Medicaid, Medicare, and assorted other arrangements purchasing
medical care. This bill will not stop them from purchasing
medical care nor will it change the way they purchase medical
care nor is it likely to change how much medical care they
purchase.
To put this even more clearly, in 2008, the country spent $2.3
trillion on health care. In 2016 -- so, after implementation --
this bill will
spend about $150 billion helping people buy health care.
Assume that national spending that year will be about $3
trillion, then the health bill is accounting for about 5
percent of our spending that year. The idea that this bill,
which is going to cost fairly little in the scheme of things
and do virtually nothing to people who are already insured, is
somehow transforming the provision of 16 percent of GDP is
misleading at best.
In reality, saying that health care legislation "affects" 16
percent of GDP is a rather modest statement. While both the House
and Senate bills may largely preserve the employer-based
insurance model, if passed, they would certainly allow government
to get its hands on every aspect of the health care system. The
individual insurance market would disappear, and instead all
sales would move to government-run exchanges. Once implemented,
the House bill would actually make it illegal for private
insurance companies to sell policies to individuals outside of
the government exchange, which would be national. While the
insurance policies offered within the exchange(s) would be
ostensibly private, government officials would design them
(whether it ends up being the Secretary of Health and Human
Services or the Health Choices Commissioner we don't yet know).
Because the government would be mandating that everybody purchase
insurance, it would also be in a position to determine what
constitutes insurance. Therefore, whether somebody gets insurance
through the employer or individual market, they'll have to be in
a position to prove to the Internal Revenue Service that they
have a qualifying insurance policy, or they'll face a tax. In
addition, the much-touted reforms of the insurance industry --
eliminating pre-existing condition exclusions, capping insurers
ability to charge more to smokers or older Americans, mandating
certain benefits, etc. -- would affect premiums througout the
insurance market.
Meanwhile, the legislation affects existing government programs.
It expands Medicaid by 15 million people, placing a further
burden on states that are already struggling with to pay for the
program. And it cuts hundreds of billions of dollars from
Medicare, including cuts to Medicare Advantage plans, which have
11 million enrollees (or roughly a quarter of all Medicare
beneficiaries). The Senate bill includes as one of its major
cost-saving provisions an Independent Payment Advisory Board that
would be able to implement changes to Medicare payments with
limited Congressional intervention.
Then there are a variety of other measures that will have to be
reconciled during negotiations, but either way, would have a
substantial affect on the private sector. The House bill includes
a mandate that employers provide health insurance that's deemed
acceptable by the Health Choices Commissioner, while the Senate
bill would tax employers if they have an employee who uses
government subsidies to purchase insurance on an exchange.
There's also the revenue measures, which, depending on how the
House and Senate bills get merged could mean: an income surtax; a
payroll tax hike; a tax on insurers; a tax on medical device
makers; a tax on drug companies; and a tax on expensive health
care plans. The Senate bill also has a tax on indoor tanning,
which we can all laugh about, but is actually a telling example
of the arbitrary nature of government power, as well as the scope
of this legislation.
In the headline I said it would affect "at least" 16 percent of
GDP, and that's because in spite of Obama administration promises
that health care legislation will bend the cost curve, by the end
of the decade, we'll actually be spending a lot more on health
care than we are now, and even more that we would if we were to
simply do nothing. That's according to the Centers for Medicare
and Medicaid Services, which is the division at the Department of
Health and Human Services tasked with tracking national health
care expenditures, from which the "16 percent of GDP" statistic
comes from. According to two recent reports issued by the actuary
at CMS, the Senate bill would hike health care spending to
20.9 percent of GDP, and the House bill would raise it to
21.1 percent of GDP.
