I had barely posted my previous submission and headed out the door for my 5 mile run/walk when the thought occurred to me, “I had failed to fully analyze and develop my thoughts regarding the cost of Reid’s plan.”
So, in an effort to correct that failure, I offer this update.
In my original post I discussed the addition of $518 billion in taxes associated with the Reid bill. I my rush, I didn’t consider that that $518 billion is over 10 years, not per year as stated. With that, the cost of “insurance” averaged per family of the “uninsured” is reduced to about $5,412 per year. On its face that’s a reduction, for those “families,” in the cost of their “health care insurance” at least as it relates to the American taxpayer when compared to the “average” cost of private insurance.
Score one for Reid.
But the Reid plan is not going to cost merely the $518 billion in new taxes. Democrats talk about a $1 Trillion cost over 10 years. Reid claims to pay for about half the cost of his plan through “found savings” in Medicare and other areas of health care.
That $1 Trillion expense, amortized over the “30 million uninsured” results in a cost per family of $10,477 per year, back above the cost of private insurance by 66%. So Reid’s plan will cost far more than it would to simply have the taxpayer foot the bill for private insurance for the targeted group.
But there’s one more step. While Reid’s plan calls for taxes starting in 2010, the “benefits don’t actually begin until 3 years later in 2014. So the cost of the Reid plan is actually amortized over 7 years, not 10 years. That means the cost of insuring the “uninsured” rises to $14,952 for each of our hypothetical families in the so called “30 million uninsured.” That’s an overrun of $8,624 per year, or 136%, above the average cost of private health insurance.
(Disclaimer, I do not advocate forcing taxpayers buy insurance for 30 million people, many who don’t have insurance by choice. I merely make the statement for the sake of the argument.)
No one who has observed Washington politics for any length of time believes the costing of Congressional legislation. There has never been a bill come out of Congress that cost what the legislation originally stated and never has it cost less. But let's give them the benefit of the doubt and say their cost projections are spot on.
Here’s where it get’s interesting. If, for the sake of argument, the taxpayer footed the private insurance bill for the 30 million “uninsured” to the tune of $60.46 billion, and Reid achieved his claim of $500 billion is savings from Medicare, et al, there would be no need for heaping $518 billion in new taxes on the American people.
In addition to letting Americans keep that $518 billion in their pockets to invest and spend in this economy, with the savings realized from his plan, Reid could cut taxes by $439 billion. That would be a huge shot in the arm for the economy and would serve to fuel economic growth and investment, creating jobs and reviving growth in all areas, including the struggling housing market.
On the other hand, if Reid followed true to his nature and didn’t trust the taxpayers with their own money, he could use the surplus to pay down the national debt. Now the following assumes that Congress will grab its collective self by the “neck” and make hard decisions, do away with waste, pork, gratuitous entitlements and unconstitutional programs that are better run by local and state governments. I know, that’s a huge assumption but let’s enjoy the fantasy for a moment.
For the sake of argument, let’s say they do it. They balance the federal budget, then take the $439 billion saved after buying private insurance for the “uninsured” and begin paying down the national debt, you know, that $12 Trillion behemoth that hangs over the head of every American like a guillotine and threatens our national security.
If they could bring themselves to do it, that is, pay down debt instead of creating more, after 13 years it would be cut nearly in half. By the time my young nephews and nieces were getting close to retirement 28 years from now the national debt would be history and they could enjoy a retirement free of the worry of a government that would tax away their savings and compete for the investment and interest earnings they should be receiving on their hard earned money.
As a further benefit, my family, along with the progeny of all Americans would be able to live in a world where their country and by extension themselves, could not be held hostage by the political aspirations of a foreign nation, i.e. China, Japan, OPEC, that is bent on threatening to collapse the US economy by demanding immediate repayment of debt held, or simply refuse to buy more.
That alternative reality, paying down the national debt, the US becoming a creditor rather than a debtor nation, would allow them to enjoy a prosperous and peaceful retirement in their “golden years.”
In either case, the “savings” that Reid claims to find would filter through to the rest of the health care system, resulting in decreased costs which in turn would mean insurance companies, with decreased exposure could lower the cost of health care premiums. That in turn would decrease the cost to taxpayer for both their own insurance plans and those of the formerly “uninsured.”
Taking those newly found dollars, individual Americans would begin investing them in the economy through direct investment or through spending for goods and service. That in turn would add even more fuel to the engine of economic growth.
So I stand by my original conclusion, there is a better way to accomplish providing health care insurance for Harry Reid’s target group. Again, I don’t agree with his premise, but using his premise and tools, there is a better way that would strengthen and grow the economy. Not become an anchor around our necks and drag us into a deep, dark abyss.
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
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