Simple Healthcare Math

The Obama media seem to be wringing their hands over the possibility that President Obama's attempt to nationalize America's healthcare could go down in flames, despite ABC's upcoming White House telethon.  Politico reluctantly acknowledged that a trillion dollars does seem like an awfully large number to most voters:

That is why Democrats admit that it was a public relations disaster this week when the Congressional Budget Office issued a report this week concluding, from a partial draft of a Senate health committee bill, that the plan would cost $1 trillion over 10 years but only provide coverage for 16 million of the estimated 50 million Americans who are uninsured.

The Washington Post reported that the CBO cost estimate for another draft version of the bill is $1.6 trillion.  In the same story, Senator Judd Gregg (R-NH) was quoted as saying the price tag easily could reach $2 trillion.  For sake of argument, let's assume the middle estimate of $1.6T is valid and it would cover 16 million Americans.

Why didn't Mr. Obama downplay the $1.6T CBO report as sensationalism, and point out that it actually would cost a "mere" $160 billion, on average, per year?  Perhaps it is because once he starts to break down the number into understandable chunks, he risks spotlighting the relatively high per-capita cost of his program.

A hundred and sixty billion dollars per year is $13.3B per month to insure only 16 million people.  That works out to about $833 per subscriber.  That might be a good price for a 75-year-old, but Medicare already covers them.  Mr. Obama wants taxpayers to insure Americans in their 30s, 40s, and 50s.

A quick scan of the Anthem Blue Cross website shows that society could get a much better deal in the private sector -- even without a 16-million person group rate.  A Santa Monica, California 50-year-old male can get a $3500 deductible HSA policy for $172 per month.  That includes drug coverage and no co-pay for office visits after the deductible is met.

If the subscriber is healthy enough not to reach the deductible amount in a given year, his average variable cost ranges from zero to $292 per month, plus the $172 fixed cost, or a maximum total of $464.  And since that is a health savings account policy, the $292 reduces his taxable income.  If the Santa Monica resident's combined marginal state and federal tax rate is 30 percent, his total monthly after-tax cost is no more than $204 to cover the deductible amount, plus $172 for the insurance premium, a maximum total of $376.

Granted, women in their childbearing years pay more for maternity coverage, but having a baby is a voluntary step (especially with free abortion clinics), theoretically taken by those that can afford it.  Policies with no maternity benefits are available for 30-year-olds at well under a hundred dollars per month.