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April 28, 2010

BUDGET BS: THE COST OF HEALTHCARE



The discussion on health care has been extremely popular over the last year as the Obama administration has made health care reform top priority.  However, little has been discussed about the true costs of these entitlements.  Let’s examine what the costs will be for Medicare and Medicaid over the next five years.




The government paid out $671 billion in health care costs in 2008.  From 2009 to 2014, the projected costs are as follows (in Billions).
Type
2009
2010
2011
2012
2013
2014
Medicare
$353.4
$389.0
$372.4
$382.5
$406.2
$426.9
Medicaid
$430.8
$457.8
$502.0
$512.0
$570.2
$635.9
Total
$784.2
$846.8
$874.4
$894.5
$976.3
$1,062.8

I want to note that these numbers are from the budget that the Obama Administration put together before the health care bill passed.  Since the bill has passed, the administration has put out a new budget that looks forward to 2015 and gives new estimates on health care costs.  These projected figures reflect the passage of the health care bill.  Does the new bill control costs?
Let’s compare Medicaid and Medicare added together in the new budget and calculate the savings.
Budget
2010
2011
2012
2013
2014
2015
Old
$846.8
$874.4
$894.5
$976.3
$1,062.8
N/A
New
$829.5
$898.0
$878.5
$950.8
$1,037.1
$1,088.3
Savings
$17.3
-$23.6
$16.0
$25.5
$25.7
N/A

From 2010 to 2014, the health care bill estimates a cost decrease of a little more than $60 billion.  It appears that the costs have been decreased by 2%.  While this is something, I have been unable to find the true cause of this cost decrease or how the administration is calculating this.  What I do know is that any increases in costs or cost pressures will be financed with higher taxes.
I believe that we can improve the burden of healthcare on our economy by addressing the cost side.  The administration recognizes the cost issues surrounding these programs, however, I believe that by creating a new entitlement program for 32 million people, we are creating a risk that these costs could balloon much higher than their projections over the next decade.   In addition to this, the administration is looking into bringing millions of illegal immigrants onto the citizen scrolls, effectively making them eligible for government health care.
The average taxpayer is paying $2,295 in taxes for health care this year which is a $166 increase from 2008.
Over the next five years, the average Americans increased taxpayer liability is $2,000.  This means that if the Obama administration cannot freeze or reduce health care costs over the next five years, it costs the average taxpayer $2,000.
Since the 'Budget BS' series has started, we have discovered the average taxpayer’s liability for 2010 has increased by $528 and by $3,558 through 2014thanks to the Obama Administration. 




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